For many couples in Washington State, their family home represents the single largest asset in their marital estate. The mortgage associated with that home, in turn, may represent the single largest debt in their marital estate. Figuring out how to handle these two things during a divorce may be tricky, especially when emotions tend to get in the way.
It is understandable for people to want to try and stay in their homes, especially if their children are still young and at home. However, there are some very real financial implications of making this decision. The Mortgage Reports explains that in the eyes of a mortgage holder, the debt on a home is separate from the home itself. Therefore, even if a divorce decree stipulates that one person is responsible for the home loan payments, the bank may pursue both parties for repayment if the original joint loan remains in effect.
Some people may think that signing a quit claim deed releases them from financial responsibility, but that is not true. A quit claim deed simply hands over interest in a property. Again, if the joint mortgage is in effect, both spouses may be viewed as financially responsible for the property.
According to Bankrate, if a couple considers selling the home outright or having one spouse buy the other out, they should carefully evaluate the tax implications of those decisions before making a final selection. If one party may pay spousal support to the other, this also should be factored into the tax considerations as the new tax code has changed how alimony is taxed.
