Life undoubtedly presents individuals with hardships. Likewise, going through a divorce is never easy, as one has to deal with emotional and mental issues. After spending years creating precious memories in a beloved home, the idea of dividing it can feel like a nightmare. And selling property after divorce is not just a financial decision; it’s a legal one too.
Here are five crucial legal aspects to consider when selling a property after divorce:
Property Ownership and Title Review
The initial stage for selling the property is checking the ownership. Even though a couple is residing there, there might be a chance of sole or joint ownership. If there is joint ownership, both parties must agree to the sale.
In the case of sole ownership, the individual technically has the right to sell it. Although the property is still considered part of the relationship’s asset pool under the Family Law Act 1975.
Consent Orders or Binding Financial Agreements
Before taking action, a couple has to send consent orders to the Family Court of Australia. Consent orders are the written documents outlining the key elements, such as property division, parenting orders, financial arrangements, etc. In short, it is a financial agreement prepared by a solicitor that explains how a property will be divided. Hence, it’s legally binding, which helps to avoid future disputes.
Mortgage and Liability Considerations
After separating, an outstanding mortgage can be another aspect to be considered by both parties. Even if only one remains in the property, both are liable for the remaining mortgage. Whoever fails to pay back, the credit score gets affected.
A financial settlement should outline who continues to pay until the sale.
Capital Gains Tax (CGT) Implications
Capital Gains Tax (CGT) is a matter of concern, especially when a property is sold after a divorce. While a primary residence is typically exempt from capital gains tax (CGT), the exemption may not apply if the property was used as an investment.
Capital Gains Tax (CGT) is generally not payable during the transfer of ownership from one partner to their spouse. However, the receiving partner may face CGT while actually selling it.
Appointing a Neutral Agent
It’s a good idea to choose a real estate agent whom both parties trust. This may eliminate conflict and promote an improved sales process with clear communication for all parties involved.
Selling a property post-divorce can be overwhelming. So, approaching it with legal clarity and mutual respect can make the process a bit easier.
Remember, you are not alone in this journey; consult with our team of experts and let us help you navigate the journey!
