Your New Math Matrimonial Home Buyout Calculator

  • How does my partner buy me out of my house?
  • How does buying out a partner work?
  • What is a spousal buyout mortgage?
  • How do you calculate spouse buyout?
  • How much should I ask for a buyout?
  • How does a spouse buy the other out of the house?
  • How do we value of the home.

This article attempts to answer your question and point out other items or options you may not have considered.

Should I keep the house after a divorce?

  • Property Value: The first step is to decide the matrimonial home’s current fair market value. If you can not agree on the value, hiring a professional real estate appraiser can help with the market analysis.

  • Mortgage debt: The outstanding mortgage debt on the matrimonial home must be considered because it affects the equity for the buyout.

  • Asset and liability division: The spousal buyout of the matrimonial home may be adjusted against other assets or liabilities distributed in the settlement.

  • Future Expenses: The buying spouse, who is buying out the other, should think about their ability to manage future house expenses such as mortgage payments, property taxes, insurance, maintenance costs and utilities. No point in being house poor.

  • Tax Impacts: The spousal buyout’s tax impact should be considered. For example, if the matrimonial home is sold, capital gains taxes, if any to be paid. Capital gains tax could be applicable if your principal residence (matrimonial home) were once a rental property.

  • Disposition costs are other financial considerations affecting the expenses of selling or transferring property ownership. They may apply in separation and divorce cases when one party buys out the other’s interest in the matrimonial home or when the property is sold.

    Disposition costs typically include real estate agent commissions, legal fees, title transfer fees, appraisal fees, and any other expenses in the sale or transfer of the property. The calculation and application of these costs can vary depending on the specific circumstances and location of the property.

    In Ontario, when a property is transferred between spouses as part of a separation agreement or divorce proceedings, exemptions are available for some of the usual land transfer tax and registration fees that would apply to an arm’s length transfer. The Ministry of Finance supplies more information on these exemptions and the eligibility criteria on its website.

    A CDFA will help determine the value of the property and the associated disposition costs and assess the impact of the property transfer on the overall financial situation of both parties.

    By considering these considerations, both parties can work towards a spousal buyout agreement that is fair, reasonable and fits their financial ability.

The spousal buyout calculation

Financing options for your spousal buyout

  • Access to a broader range of mortgage lenders: Mortgage brokers deal with various lenders, including banks, credit unions, and private lenders, and can present you with multiple refinancing possibilities. This is especially useful if you have unusual financial circumstances, such as self-employment income, a low credit score, or a high debt-to-income ratio, which may make qualifying for a standard bank mortgage more challenging.

  • Mortgage market knowledge: Mortgage brokers have a technical understanding of the mortgage industry and may help you navigate the complex refinancing procedure. In addition, they can explain the types of mortgages available, help you understand the terms of each new mortgage, and advise you on the best option for your financial position.

  • Time-saving: A mortgage broker can save you time by researching and comparing mortgage rates and terms on your behalf. This is especially useful if you have a hectic schedule or lack the knowledge to explore the mortgage market independently.

  • Negotiation power: Mortgage brokers can bargain with lenders on your behalf to achieve the best mortgage rates and terms possible. They can also help you negotiate other areas of the refinancing process with mortgage lenders, such as prepayment penalties or mortgage terms, to ensure you obtain the best offer.

  • Overall, engaging with a mortgage broker can help simplify the refinancing process, give you access to more lenders and mortgage options, and potentially save you time and money.

  • Land Transfer Tax: This tax is payable to the Ontario government on the value of the interest being transferred to you. The amount of tax varies depending on the home’s purchase price and ranges from 0.5% to 2.5%. However, if you are buying out your spouse’s interest in the family home as part of a court order or separation agreement, you may be exempt from paying this tax.

  • Legal Fees: You will likely need a real estate lawyer to help you with the transaction. Legal fees will vary depending on the complexity of the transaction, the lawyer’s hourly rate, and other factors.

  • Mortgage Fees: If you need to take out a mortgage to buy out your spouse, you may be subject to mortgage-related fees, such as appraisal fees, mortgage application fees, and legal fees.

  • Discharge and Registration Fees: If there is an old mortgage on the property, you may need to pay fees to discharge the old mortgage from the property title and to register the property transfer to your name.

Alternatives to the buyout of the ex-spouse’s equity

  • Joint Ownership: The couple may continue jointly owning the home, with one spouse living there and the other elsewhere. When the children are living with one spouse, and the other spouse has moved out but want to preserve a financial interest in the property, this may be a workable alternative.

  • Home Sale: The couple may sell the house and split the equity. If neither spouse wants to keep the house or if the house is too large for one person to manage, this alternative may be considered.

  • Home Rental: The couple may rent out their home and split the rental income. This may be a suitable choice if neither spouse wishes to live in the house but wishes to keep ownership for financial reasons and split the proceeds.
  • Deferred Sale: The couple may postpone the home sale until the children are older, allowing them to live there until they are ready to go. This possibility may be suitable if neither spouse wishes to dwell in the home permanently but wishes to offer stability for the children.

  • It is crucial to remember that the options accessible to a divorced spouse may vary depending on their case, such as their financial status, the worth of their property, and the needs of their children. Therefore, seeking the counsel of a lawyer or mediator to help you find the best course of action for your circumstance is always a wise choice.

What Happens if I later sell the house?

About the Author:
Ken Maynard CDFA, Acc.FM

I assist intelligent and successful couples in crafting rapid, custom separation agreements that pave the way for a smooth transition towards a secure future. This efficient process is achieved in about four meetings, effectively sidestepping the excessive conflicts, confusion, and costs commonly linked to legal proceedings. Clients have the flexibility to collaborate with me either via video conference or in-person through a DTSW associate at any of our six Greater Toronto mediation centers, located in Aurora, Barrie, North York, Vaughan, Mississauga, and Scarborough.

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