Gray Divorce and the Family Home: Should You Sell or Should One of You Stay?

Divorce later in life is no longer unusual.

In 1990, only about 8% of people getting divorced in the United States were age 50 or older. By 2022, that figure had grown to nearly 40%, according to research from the National Center for Family & Marriage Research at Bowling Green State University.

And many of these marriages have lasted decades. Among adults age 50 and older experiencing their first divorce in 2022, one-quarter had been married for at least 37 years.

That’s one reason a “gray divorce” can look very different from divorce earlier in life.

By 55, 65 or 75, the family home may be one of a couple’s largest financial assets. You may have owned it for decades. The mortgage may be small — or completely paid off. Your children may have grown up there. You may have remodeled it, planted the garden, celebrated holidays there and assumed you would grow old there together.

And now you have to decide: What happens to the house?

For many couples going through a gray divorce, the home is both a significant financial asset and something deeply connected to their shared history. That combination can make deciding whether to sell particularly difficult.

There isn’t one answer that’s right for every couple. But there are several important questions to consider before deciding whether to sell the home or have one spouse remain in it.

What to Consider Before Deciding What Happens to the Family Home

1. Can One Person Really Afford the House?

It’s easy to begin with, “I want to keep the house.”

A better place to begin is: “Can I comfortably afford to keep the house?”

That means looking beyond the mortgage payment.

Consider property taxes, homeowners insurance, utilities, landscaping, routine maintenance and the inevitable major repairs that come with homeownership. An older Sacramento home, for example, may eventually need significant work involving the roof, HVAC, plumbing, electrical system or foundation.

A house that was comfortable to maintain with two people contributing to the household may feel very different when one person is responsible for it.

And if you’re approaching or already in retirement, it’s especially important to consider what keeping the house could mean for monthly cash flow and long-term financial security.

2. How Would You Buy Out Your Spouse?

If both spouses have equity in the home and one wants to keep it, that person may need to compensate the other spouse for their share.

Where will that money come from?

Some divorcing couples consider offsetting home equity with other marital assets, including investments or retirement assets.

But different types of assets can have very different tax consequences, liquidity and potential for future growth. A dollar of equity in a house isn’t necessarily the same as a dollar held in another type of asset.

Before agreeing to a division of significant assets, talk with your divorce attorney, CPA and/or financial advisor about the implications for your particular situation.

3. What Happens to the Mortgage?

This is an area where people can make assumptions that turn out to be expensive.

A divorce agreement may determine who is responsible for the home, but that doesn’t necessarily change the obligations someone has to the mortgage lender.

If one spouse plans to keep the house, find out what the lender will require and whether refinancing or another solution will be necessary.

This becomes particularly important when an existing mortgage has a much lower interest rate than rates available today.

Before deciding that one person will keep the house, determine what that would actually cost — not just what the current mortgage payment is.

4. Is Keeping the House the Best Use of Your Equity?

For Sacramento couples who purchased their homes many years ago, home equity can be substantial.

That can make keeping the house feel financially reassuring.

But equity in a home isn’t the same as having liquid assets available for everyday living.

If keeping the house means having a large percentage of your net worth tied up in one property and relatively little available for retirement expenses, travel, emergencies or other priorities, selling deserves consideration.

The question isn’t simply:

“Can I keep my house?”

It’s also:

“What would keeping this house mean for the rest of my financial life?”

5. Does the House Still Fit the Life You’re Going to Have?

This question can be especially important during a gray divorce.

Perhaps you bought the house because you were raising children. Maybe it has four bedrooms, a swimming pool, stairs or a large yard.

Do you still want all of that?

Think about maintenance, stairs, transportation, proximity to friends and family, access to activities and services, and the amount of work the property requires.

Divorce can be an opportunity to choose a home for the life you’re living now — rather than automatically maintaining the home that fit your previous life.

6. What Would Selling Give Each of You?

Selling isn’t always a financial necessity.

Sometimes it’s a strategic choice.

Selling the marital home may allow both spouses to access their share of the equity and establish separate households. Depending on the circumstances, that might mean purchasing smaller homes, renting for a period of time, moving closer to family or simply having more liquid assets available for the next stage of life.

Before making the decision, it can be helpful to know:

What would the home realistically sell for in today’s market?

And then:

Approximately how much would be left after the mortgage, selling expenses and other applicable costs?

That’s very different from simply looking at an automated online estimate of your home’s value.

A local real estate professional can prepare a market analysis based on recent comparable sales, the condition of the property and what is happening in your particular Sacramento neighborhood.

7. What Are the Tax Considerations?

A home that has appreciated substantially over many years can have tax implications when it is sold.

The federal tax code provides a capital-gains exclusion on the sale of a primary residence for qualifying homeowners, but divorce, ownership history, occupancy and the timing of a sale can make individual situations more complicated.

Before making a decision based on an assumption about taxes, consult a qualified tax professional about your specific circumstances.

8. Don’t Ignore the Emotional Side of the Decision

The marital home may represent security and continuity at a time when almost everything else seems to be changing.

That can make it very difficult to imagine selling it.

But it may help to separate two questions:

Do I want this house because it genuinely fits my future?

Or:

Do I want this house because I’m not ready for another change?

Neither answer is wrong.

But understanding the difference can help you make a more deliberate decision about what comes next.

Before You Decide What Happens to the House

If you’re considering divorce later in life, you don’t necessarily need to begin by deciding whether the house should be sold.

Begin by gathering information.

• Find out what the property is realistically worth.
• Determine approximately how much equity you have.
• Understand the mortgage situation.
• Calculate the true cost of keeping the home.
• Explore what each person could realistically afford if the home were sold.
• Consider what you want your next five, ten or twenty years to look like.
• Then bring that information into conversations with the attorney, financial advisor, CPA and other professionals helping you navigate the divorce.

The goal isn’t simply to figure out who gets the house.

It’s to make a housing decision that supports the life each of you will have after the divorce.

Gray Divorce and Real Estate in Sacramento

Real estate decisions during a gray divorce can involve significant financial considerations — and decades of personal history.

This is also a subject I understand personally. I’ve successfully navigated a gray divorce myself, including the decisions that come with separating a long-shared financial and home life. That experience, combined with my work as a REALTOR® and Seniors Real Estate Specialist® (SRES®), gives me a particularly personal understanding of the questions — both practical and emotional — that can arise when deciding what happens to the family home.

If you’re trying to decide what to do with the family home, you can begin with information.

You don’t have to begin with a decision.

Ann Vuletich, REALTOR®
Coldwell Banker Realty