What Should I Do with My House During My Divorce?
My name's Robert Bonavito, New Jersey Forensic Accountant. This video is part of a series of videos where I discuss forensic accounting topics for educational purposes only. If this was a litigated matter, I would take a different approach, have different conclusions based on different facts and circumstances.
Hi, my name's Robert A. Bonavito, New Jersey Forensic Accounting. Today I'm gonna discuss, "What do we do with the house in a divorce?" A house is a pretty important asset in a divorce and, you know, a lot of times, issues such as keeping the children in certain schools, staying near family and friends, become a big issue. But what we do is we focus mainly on the financial aspects of keeping a house because remember, when a divorce, the big problem with divorces, you have two separate households that we had one, so the cost'll really double.
And we always try to sit down with people and say, "Listen, you know, if you have a house and you have a $2,000 mortgage, and you got upkeep, and you have real estate taxes, you need a monthly nut here of close to, you know, $2,500 just to stay in the house. And you have to sit down, if you have young kids and you have, you know, alimony and all that added up, and after taxes, don't forget to include...a lot of people, they forget about the taxes, okay, which is like 30%.
You gonna see if you have enough cash to live, okay? Because maybe your best deal is to rent, you know, if you can rent for $1,200 versus, you know, $2,450, well, that's a big difference. Okay, and there's some tax benefits up there to owning, but you know, you have a house that hopefully is appreciating, well, here you don't. But you really have to be careful because the numbers sometimes come up very different and from a financial standpoint, you know, this is a lot of money. And you have to make sure that the alimony and, you know, you need retirement savings, and taxes, and all that, that it makes sense. And, you know, you may be comfortable for a year or two, but after year three, four or five, things can get really, really tight.
So when you're deciding what to do with the house, maybe your best option is to sell it to the spouse, if you can't afford it. And then you can relax more, and you know, or maybe get a smaller place, or move to a different neighborhood. But I realize that most of the times, the big issue is keeping the kids in the same school or next to friends and family, and you know, that supersedes everything. But you should understand what you're up against and how you're gonna, you know, make that extra payment if you do decide to keep the house.
My name's Robert Bonavito, if you have any questions, feel free to email me.