Divorcing? Here’s How Much Cash You’ll Really Get from Your Home Sale
When you sell your home during divorce, everyone talks about the sale price. But the number that truly matters is how much money actually lands in your bank account after the sale closes. This “walk-away cash” is what you’ll use to fund your next home, pay down debt, invest, or simply create financial breathing room. And the reality is: it’s almost always smaller than most people expect.
Why Walk-Away Cash Matters
During divorce, the cash you take from a home sale may be your biggest financial resource for starting your next chapter. It could determine how you buy your next home, pay off shared or personal debt, begin investing for your future, or give yourself time to plan your next steps. Overestimating this amount can create stress and disrupt your plans. Knowing your true walk-away cash helps you make decisions with confidence rather than relying on assumptions.
What Reduces Your Sale Proceeds
Several factors reduce the sale price before it becomes cash in your pocket. Key points include:
1. Remaining Mortgage Balance: The amount you still owe on your home loan is subtracted from the sale proceeds.
2. Selling Costs (typically 8–10% of the sale price):
Agent commissions (usually 5–6%)
Title, escrow, and closing fees
Minor repairs or staging costs
Seller concessions negotiated by the buyer
3. Capital Gains Taxes (if applicable):
Section 121 exclusion may allow up to $250,000 (single) or $500,000 (married filing jointly) exclusion
To qualify, you must have owned and used the home as your primary residence for at least 2 of the last 5 years
Special rules may apply for divorce, military service, or other qualifying circumstances
4. Property Tax Prorations and Escrow Adjustments: Any prepaid or owed property taxes are settled at closing, reducing net proceeds
Example
Imagine a home selling for $750,000. Suppose the mortgage balance is $320,000, and selling costs total $60,000. That leaves $370,000 before taxes. If you’re single and owe $20,000 in capital gains tax, your walk-away cash would be $350,000. If filing jointly and qualifying for the full Section 121 exclusion, you would keep the full $370,000.
The difference between the sale price and your actual walk-away cash highlights why assumptions can be misleading. It’s the cash that matters—not the headline sale price.
Key Takeaways for Divorcing Homeowners
1. Don’t assume the sale price equals cash in hand. Mortgage payoffs, selling costs, and taxes can significantly reduce the amount you keep.
2. Plan with realistic numbers. Use accurate estimates of walk-away cash to fund your next home, pay debts, or invest in your future.
3. Understand the ripple effects. Decisions made during a home sale impact both immediate liquidity and long-term financial security.
Divorce is both an emotional and financial transition. Understanding your true walk-away cash gives you a clear picture of your options and helps you start the next chapter of your life with confidence.
By Connie Howard
