Divorce and the House: Sell, Buyout, or Co-Own?

Divorce and the House: Sell, Buyout, or Co-Own?

Divorce is emotionally taxing—and decisions about the family home often add stress at an already difficult time. In Wisconsin and Minnesota, there’s no one-size-fits-all answer. The right choice depends on finances, timing, children, and how well both parties can cooperate.

This guide outlines the three most common real estate paths during divorce—selling the home, one spouse buying out the other, or temporary co-ownership—so you can make informed decisions and move forward with clarity.

This article is for general information only. Divorce and property laws vary by situation. Always consult your attorney and tax professional before making final decisions.

Option 1: Sell the Home and Split the Proceeds

Selling the home is often the cleanest and most final option.

How it works

• The home is listed jointly

• Proceeds are used to pay off the mortgage and selling costs

• Remaining equity is divided according to your divorce agreement

Pros

• Clean financial break

• Eliminates shared debt and future risk

• Often simplest for refinancing and budgeting

Cons

• Timing pressure if the market or emotions aren’t aligned

• Requires cooperation on pricing, repairs, and showings

• Moving may disrupt children or work routines

Best for

Couples who want closure, need liquidity, or are already planning separate housing.

Option 2: One Spouse Buys Out the Other

A buyout allows one spouse to keep the home while compensating the other for their share of the equity.

How it works

• A professional appraisal determines value

• Equity is calculated (value minus mortgage and liens)

• One spouse refinances and pays the other their share

Pros

• Stability for children

• Avoids selling costs and market timing

• One party keeps a familiar home

Cons

• Requires refinancing approval

• Monthly costs may increase with a single income

• One spouse gives up future appreciation

Best for

Situations where one spouse can comfortably afford the home and wants to stay long-term.

Option 3: Temporary Co-Ownership (Co-Owning After Divorce)

Some couples choose to co-own the home temporarily, often until children graduate or market conditions improve.

How it works

• Both names stay on title and mortgage

• A written agreement defines responsibilities

• Sale or buyout happens at a later date

Pros

• Stability for kids

• Flexibility in uncertain markets

• Buys time during transition

Cons

• Continued financial entanglement

• Risk if one party misses payments

• Requires strong communication and legal clarity

Best for

Short-term arrangements with clear exit plans and documented agreements.

Wisconsin vs. Minnesota: What to Know

While both states are equitable distribution states, procedural rules and timelines differ.

• Wisconsin courts generally require full financial disclosure early in the process through the Wisconsin Circuit Court

• Minnesota divorces follow disclosure and valuation standards outlined by the Minnesota Judicial Branch

Your attorney will guide how equity is calculated and divided based on your specific case.

Common Questions During Divorce Real Estate Decisions

Do we have to sell before the divorce is final?
Not always. Courts may allow a sale during or after proceedings, depending on circumstances.

What about capital gains taxes?
Primary residence exclusions may apply, but tax outcomes vary. Consult a CPA or review IRS guidance via the Internal Revenue Service.

Who pays the mortgage during the process?
This should be clearly defined in temporary orders or written agreements to avoid credit damage.

How a Real Estate Agent Can Help

A neutral, experienced agent can:

• Provide realistic pricing guidance

• Coordinate showings with sensitivity

• Explain timelines without pressure

• Work alongside attorneys and mediators

The goal isn’t just selling a house—it’s helping both parties move forward with clarity and dignity.

Bottom Line

There is no “right” answer—only the right fit for your situation. Whether you sell, buy out, or temporarily co-own, the key is understanding the implications before committing.

If you’re navigating divorce and real estate in Wisconsin or Minnesota, having a clear plan—and the right professionals—can make a difficult season more manageable.