Selling a House During a Divorce in Utah

How is the house divided in a Utah divorce?

The Utah courts' self-help center puts it plainly: "Utah law requires an equitable division of marital property. Equitable means fair, which is not necessarily equal." A home bought during the marriage is generally treated as marital property, even if only one spouse's name is on the deed.

Utah's divorce statute lets the court include in the decree "any equitable orders relating to ... any property, debts, or obligations," and requires the decree to say which spouse pays which joint debts. If the two of you agree on the house, the judge reviews the agreement to make sure it is fair.

The courts' page describes the three usual outcomes: the home is sold and the money divided, one spouse buys out the other for what they would have received in a sale, or one spouse is ordered to refinance the mortgage into their own name.

This page explains the real estate side. Every divorce is different, and only your attorney can advise you on your rights. We work alongside both spouses' attorneys and stay neutral.

Should you sell the house or buy out your spouse?

A third option some couples use is a delayed sale: one spouse stays for a set time, often until a child finishes school, and the home is sold later. If you do this, the decree should spell out who pays what in the meantime and how the proceeds will be split.

How do you agree on what the house is worth?

Most disagreements about the house are really disagreements about its value. A neutral number helps both sides:

• An appraisal by a licensed appraiser, often ordered jointly.
• A comparative market analysis from a local agent, with the comparable sales shown so both attorneys can check the math.
• Adjust for selling costs. If one spouse keeps the home, many couples subtract an estimate of what a sale would have cost, since the buying spouse avoids that cost now but may pay it later. Your attorneys can tell you whether that fits your case.

Who gets to stay in the house during a Utah divorce?

There is no automatic rule. The spouses can agree, or the court can make temporary orders while the case is pending. Utah law lets the court make interim orders it considers just and equitable even before the 30-day waiting period ends. Talk with your attorney before moving out, because it can affect parenting time and how expenses are handled.

Utah also requires at least one mediation session if contested issues remain after a response is filed. The house is often settled there.

Do you have to refinance to remove a spouse from the mortgage?

Usually, yes. Removing a spouse from the deed is not the same as removing them from the loan. The Utah courts note that a divorce decree dividing debt binds only the spouses, and "creditors don't have to follow the court order." If the spouse who keeps the home stops paying, the lender can still pursue the other spouse.

That is why many decrees require the spouse keeping the home to refinance within a set time, or sell if they cannot. Federal law generally stops the lender from calling the loan due just because the home is transferred to a spouse under a divorce decree, which gives time to refinance. Some loans are assumable; ask the lender.

If the keeping spouse cannot qualify, selling is often the most practical way to protect both people's credit.

Do you pay capital gains tax when you sell the house in a divorce?

Often not, thanks to the federal home sale exclusion. Each spouse can generally exclude up to $250,000 of gain if they owned and lived in the home for two of the five years before the sale. Selling while still married and filing jointly can allow up to $500,000.

IRS Publication 523 has special rules for divorcing couples:

• The spouse who moved out can still count the home as their residence if they are still an owner and the other spouse is allowed to live there under a divorce or separation instrument.
• If the home was transferred to you by your spouse or ex-spouse, you can count the time they owned it, but you must meet the two-year residence test yourself.
• Divorce counts as an unforeseeable event, so a reduced (partial) exclusion may be available even if you have not hit two years.
• Transferring the house to your spouse as part of the divorce is generally not a taxable sale. IRS Publication 504 says no gain or loss is recognized on transfers between spouses incident to divorce, but the spouse who keeps it also keeps the original basis.

Our guide to capital gains tax when selling a home in Utah has worked examples. Ask your CPA how your settlement affects your taxes.

Selling a house during divorce: step by step

1. Talk to your attorney first about whether to sell, buy out, or wait, and what the decree should say.
2. Agree on the agent and the price process. Many couples agree in writing that they will accept the agent's pricing advice, or let a neutral party break ties.
3. Decide who pays the mortgage and repairs until closing.
4. List and show the home. Both owners on title generally sign the listing, the purchase contract, and the deed.
5. Close. The title company pays off the loan and costs, then distributes or holds the proceeds as your written agreement or court order directs.

We communicate with both spouses equally, in writing, and copy both attorneys when you want us to. No one is left guessing.