For most divorcing couples in central Florida, the family home is the couple’s principal asset. If the couple has lived in the home for a significant period, the house has more than likely accumulated significant value. It may also represent the couple’s single largest debt in the mortgage loan or other indebtedness secured by a real estate mortgage. The law requires that the couple divide their assets fairly and equitably, and this rule almost always requires the couple to sell their home and divide the resulting proceeds or indebtedness equally. Many divorcing Floridians do not realize that the sale of the marital home may generate significant credits or setoffs against the net equity in the home.
These entitlements and setoffs must be distributed between the parties just like any other marital asset or debt, but the timing of these distributions and calculating each party’s equitable share can be complex. The couple can agree on the distribution of setoffs and credits, but in the absence of any such agreement, the court will make the distribution as required by the applicable statute. The first factor is whether the exclusive use and possession of the home will be awarded to one of the parties. The court may also consider whether alimony is being awarded to allow the party in possession of the house to pay real estate taxes and mortgage installments. An order for payment of child support may also be considered by the court.
The court may also consider the value of the use and occupancy of the house to the party in possession and the loss of value for use and occupancy to the non-possessory spouse. An important consideration is which party will be allowed to claim income tax deductions for property taxes and interest payments. The court must also consider the overall tax consequences of the sale to both parties. Finally, the court must consider any other factor that is necessary to make the sale or award of possession serve equity and justice between the parties.
The disposition of the marital residence can often be a complicated legal transaction in its own right. The award of credits or setoffs can provide a significant financial benefit or an unexpected financial cost to the parties. Anyone who is concerned about the financial effect of the sale of the marital residence may wish to consult an experienced divorce attorney for an analysis of the parties’ financial situation and how it will be affect by the sale or other disposition of the family residence.