The sign goes in the yard on a Tuesday, and by Thursday there is a lockbox on the front door. One of the many difficult decisions divorcing couples face involves what to do with their single most valuable marital asset, the marital home. Few questions present such a tightly woven blend of emotional and financial issues.
For most couples ending their marriage, their home is usually the biggest asset. Many soon to be divorced spouses cannot afford to keep the home based on their individual income alone, so to equitably distribute or divide the asset, the courts (or the parties by settlement agreement) will place the home on the open market for sale, and the parties split the net proceeds from the sale.The sign goes in the yard on a Tuesday, and by Thursday there is a lockbox on the front door. One of the many difficult decisions divorcing couples face involves what to do with their single most valuable marital asset, the marital home. Few questions present such a tightly woven blend of emotional and financial issues.
Why Both Spouses Usually Need to Sign
If the house is your homestead and you are still married, you will both need to sign to sell it, even if only one of you is on the deed. Florida law gives special protection to the home a married couple lives in. Article X, Section 4(c) of the Florida Constitution states, in part, that “The owner of homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift.” So it does not matter whose name is on the deed or whose paycheck covered the down payment in 2014. If one spouse will not cooperate, ask your attorney what options are available in your case.
Clients often ask if they will lose their interest in the home by moving out. They won’t. Florida is a no-fault state, and a spouse who moves out before or during the divorce is not considered to have abandoned the home, so he or she keeps the same equitable and legal interest in it. There may still be financial obligations to the home as a joint title holder to the property, but such issues can be addressed by the family court while the case is pending. Moving out changes your address, not your ownership.
A home owned by one spouse prior to the marriage, or an inheritance received by one of the spouses during the marriage, can start out as non-marital property. If the spouse with the non-marital asset co-titles it with his or her spouse or commingles it with marital assets, it may become a marital asset under Florida’s equitable distribution laws. And if the deed is in both of your names as tenants by the entireties, a form of ownership only married couples can hold, Section 61.075(6)(a)2. says the property, whether acquired prior to or during the marriage, “shall be presumed to be a marital asset.”
What a Judge Can Do with a House
Some people think that in a divorce, all assets are distributed 50/50. While such is the starting point for distribution, and the presumption under Florida law, it is not always the case. Equitable means fair, and fair is not always equal.
A house is the hardest asset to split, since no one can cut a home in two. Instead, judges will often award the residence to one spouse, who then buys out the other spouse’s share. In the alternative, the courts can order the house sold.
Keeping the children in their home and school may be an important consideration, but the arrangement also has to be financially workable. While the Court may order that the parent with majority timesharing for the minor children stay in the home if it is in their best interest, the statute also requires that “it is financially feasible for the parties to maintain the residence until the child is emancipated.”
Permission to stay in the home for a time is not the same as receiving ownership of it. If the parties cannot agree on how to divide the home, the Court may order a sale with an appropriate division of the net proceeds to follow.
Remember, it takes time to sell a home. If your relationship has deteriorated so you are not communicating, you may have trouble cooperating through the marketing process, especially after the divorce is final.
The Bank Is Not a Party to Your Divorce
One of the problems most divorcing couples face is who will take over the mortgage on the marital home. Remember, both of you signed that note when things were going well. The judge cannot force the bank to change the obligation on the note as part of the divorce decree.
By signing the note, both borrowers are jointly and individually responsible for the debt and any interest or late charges that are due on the loan. Liability for the debt to the lender remains, even if a divorce decree or settlement agreement states that a former spouse will not be responsible for the mortgage. Your divorce decree binds your spouse. It does not bind the bank.
Refinancing and Other Mortgage Options
Before you visit a lawyer you might check with your mortgage holder to see if one of you qualifies for re-financing the marital home in your individual name. The spouse keeping the house will want to get the best deal in their financing, so should use a mortgage broker or apply at different lenders to compare rates. Freddie Mac’s survey for the week of October 22, 2026 had the 30-year fixed at 7.32 percent. For every $100,000.00 borrowed, it costs about $265.00 more per month in principal and interest than a 3 percent note for a thirty year mortgage, and plenty of couples in Ormond Beach and Palm Coast are holding notes written at 3 percent or less in 2020 or 2021.
In deciding whether to refinance or assume, you must consider the impact on your credit. A transfer to your spouse in a divorce generally does not let the lender call the loan due, but it does not release the departing spouse either, and only the servicer will be able to tell you whether an assumption with a release is a real option.
Sometimes the only way out is to “partition and sell.” That means the two of you will divide the net proceeds after the sale. If neither party can afford a buy-out, or if there is little equity in the home, the divorce may force a move for both of you. Because divorce cases can drag on for over a year, it is important to have enough money set aside to carry the house, or a new place, in the meantime.
If You Sell While the Divorce Is Pending
The first question we always ask a client is whether there is any chance the parties can work together to sell the home, split the proceeds, and move on with their lives. Retaining a knowledgeable realtor is a good first step in determining the value of the home. The two of you have to agree on the following issues: the listing agent, the asking price, how offers will be answered and, if one of you still lives there, how showings will work.
The marital settlement agreement, or a temporary agreement, provides the opportunity to assign responsibilities for the mortgage, insurance, taxes and repairs until closing. Keep records of what each of you pays. Although the money is generally split under the settlement agreement or final judgment, a party can seek extra reimbursement for the expenses they have previously contributed toward the property, if the agreement or judgment provides for it. The net proceeds can be held in trust until the parties agree, or the court decides, how to divide them.
Documentary Stamps You May Not Owe
Spouses who transfer the marital home to one another in a divorce may be able to avoid all or part of that “doc stamp” tax depending on how the transfer is handled. These taxes are usually charged on Florida deeds and on notes and other written obligations to pay money.
Section 201.02(1)(a) sets the rate: “on each $100 of the consideration therefor the tax shall be 70 cents.” And consideration includes “the amount of any mortgage, purchase money mortgage lien, or other encumbrance.” Say there’s a $380,000 mortgage and one spouse deeds half the house to the other. If that transfer were taxable, the stamps on the $190,000 half would be $1,330.
Section 201.02(7)(a) exempts “A deed, transfer, or conveyance between spouses or former spouses pursuant to an action for dissolution of their marriage” when the property is or was their marital home. Have your attorney or closing professional confirm that your transfer qualifies.
Capital Gains and the Year You Sell
When it comes to federal taxes, IRS Publication 523 is one of the best tools to take advantage of. With a general idea of your dates, you’ll be able to find worksheets, examples and other resources full of information that’s relevant to your sale.
The rule behind it is Internal Revenue Code Section 121. Each of you can exclude up to $250,000 of gain, or $500,000 on a joint return, if either of you meets the ownership test and both of you meet the use test (generally, living there “for periods aggregating 2 years or more” during the five years before the sale). If those factors are not in place, then the spouse who keeps the house and sells it later as a single filer most likely will be limited to $250,000, if he or she qualifies on his or her own.
If you move out, Section 121(d)(3)(B) treats you as using the home “while such individual’s spouse or former spouse is granted use of the property” under a divorce or separation instrument.
Before you sell, you should do a final tax check. Look at your ownership dates and your use dates. It also doesn’t hurt to take a peek at the instrument itself. This will save you time and headaches next April. Finding these problems before closing will even save you some money, since you could ask a good tax professional to run the numbers both ways.
What Happens to Your Save Our Homes Benefit
Are you moving out this year? If so, you’re in good company. Many divorcing homeowners are Save Our Homes owners, for whom “home” carries an assessment difference that can follow them under a brand-new roof. There are regulations you need to check out before you go. Special tax implications also could affect you. Up to $500,000 of that difference can move with you, as long as the new Florida homestead is established within three years of January 1 of the year the old homestead was abandoned.
Form DR-501TS is a form you can fill out and file with the property appraiser in the county where the old homestead sits. Its purpose is to help each spouse carry the right share of the benefit. Under the form’s instructions, you must “Be married to each other on the date the jointly titled property is abandoned,” and once filed, “the designated ownership shares are irrevocable.”
Before the Sign Goes in the Yard
Once you decide to get a divorce, the work of organizing your finances should begin in earnest. Both the organized and disorganized alike will be required to gather up financial documents. You and your spouse will need to produce bank statements, tax returns, deeds, mortgage information, life insurance and health insurance policies, proof of income, as well as credit reports and retirement account information.
For the house, add the insurance binder and, if there’s an HOA, the estoppel letter. If you and your spouse cannot agree upon the fair market value of the home, we strongly recommend that you obtain a certified appraisal of the home. The more information you have on hand the better and the sooner the better!
Speaking of disclosure, be sure to pack your important documents away in one file. While you want to eliminate as many surprises in the case as possible, safe storage for your important documents is something you don’t want to skimp on. Mandatory disclosure is going to ask for most of it anyway! Florida Family Law Rule 12.285 generally requires the documents to be served “within 45 days of service of the initial pleading on the respondent.”
How Rice Law Firm Can Help
Creativity, along with knowledge of the case law and statutory authority, are essential requirements in distributing the marital home. If you need legal advice concerning a divorce or family law matter, you can reach Paul Rice at our Daytona Beach office at 386-257-1222. He is board certified by The Florida Bar in marital and family law, and Rice Law Firm has been helping Volusia County families through divorce since 1983.