Its common, especially for women, to want to keep the marital home in divorce. There is absolutely emotional value to holding onto that shred of normalcy, especially when kids are involved. Unfortunately the costs may be more than you think. Homes are illiquid, expensive to maintain, and can come with costly surprises upon sale.

If you and your spouse have owned the home for several years and have seen the value appreciate, each of you will be entitled to half of the appreciation in the home upon divorce. For instance, if you purchased your home for $500K and it is now worth over a million, each of you will be entitled to 50% of the appreciation or $250K. This means in order to keep the home, you will need to pay your spouse $250,000 from another asset, potentially draining your retirement funds or leaving you cash poor and unable to afford your lifestyle.

If you do keep the home, there are also tax considerations when you eventually sell the property. If you were to sell that same home as part of the divorce, you and your spouse would be entitled to the $500K marital capital gain exclusion, resulting in $0 capital gains tax. Single people are only entitled to a $250K capital gain exclusion, meaning that upon the sale of the home that you kept, you will have to pay tax on $250K of capital gain, or $37,500.

If you are thinking about keeping the marital home, make sure you understand the monthly and annual expenses associated with the property and think long and hard about how your lifestyle would need to change in order for you to afford the property. Understand your options. For example, if you and your spouse sell the home, you can take your money and invest it, while keeping your retirement or savings intact, or buy another property that better suits your current needs and new income level.

Divorce is hard but you also have an opportunity for a new beginning. If you are feeling uncertain about your ability to afford the marital home or knowing whether that’s the best choice for you and your family, bring in a Certified Divorce Financial Analyst (CDFA) to help guide you through the various important considerations. Don’t make costly mistakes you can’t take back.

Add a financial expert to your team so that you can feel confident that you are doing the right thing. You won’t regret it.