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HDH
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Reged: 11/19/07
Posts: 3
how to split proceeds on sale of home...
      #498970 - 01/31/09 08:13 AM

Hi All,

My ex and I closed on the sale of the marital home yesterday. Since I had been paying the real estate taxes since the divorce, I am entitled to recover the pro-rata amounts due back at closing (let's say $5k for illustration purposes). This is not in dispute.

Also, my ex drew down from our home equity line of credit to put a down-payment on a new condo she is buying (let's say $15k for illustration) The HELOC was (obviously) closed upon sale of the marital residence, using the proceeds to pay it off. Therefore the net proceeds are reduced by the amount of her drawdown, so I am entitled to recover that amount at closing as well. This is also not in dispute.

The question I have is how to fairly split the proceeds so that I get the proper credits. Basically, should I take the $20k from the net proceeds first, then we equally divide the rest? *OR* should the net proceeds *first* be divided equally, then she gives me the $20k additional from her share?

I think the latter, not just because its in my favor, but because if I were to take $20k from the net proceeds first, those proceeds are already half mine, and my $20k credit would seem to dilute my share of the remaining proceeds to be divided equally. I think :-).

Our attorney is going to get another opinion or two before cutting the final checks but I wanted to ask here for opinions as well.


illustration: $100k net proceeds, $20k credit to husband:

option 1. recover credit first, then split:
100 - 20 = 80, split remaining = 40 each.
Husband total: 40 + 20 = 60
Wife total: 40


Option 2. split proceeds first, then recover credit from wife's portion
100 / 2 = 50 each

Husband total: 50 + 20 = 70
Wife total: 50 - 20 = 30

Appreciate your views on this.

Thanks,
Howard


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matilda
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Reged: 11/11/04
Posts: 2100
Re: how to split proceeds on sale of home... [Re: HDH]
      #499010 - 01/31/09 12:53 PM

I agree that option two sounds more equitable. If you use option one, you aren't getting fully paid back and she is benefiting unfairly. Hopefully if you use a good example like you provided, she will understand and agree.

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finz
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Reged: 06/17/08
Posts: 6756
Re: how to split proceeds on sale of home... [Re: matilda]
      #499053 - 01/31/09 05:09 PM

Option 2 , the way you did it, is wackoo...........how do you figure you should end up with $40K more than her ? You put in $5K she did not. You "should have put in 2.5K and your ex 2.5K. She took out $15K, but half of that would have been her profit anyhow.

Call it.."the house funds"........The "payback" money should come out first. You get the $5K back from taxes. Then you get the $15K heloc/car treat that she took. That makes you both EVEN..........then you evenly split the remaining proceeds from the house.

To put it another way you could call it the "she owes you fund" .......She does not owe you $20K directly. She owes $2.5K for her share of the taxes. She also owes you $7.5K for your share of the $15K heloc she took out (the other half of the 15K heloc was her 7.5K) So if you divide the home sale first.......she only pays you $10K (7.5 + 2.5 = 10)

So, it should be....

Option 1

100-20=80, split remaining=40

husband 40+20=60
wife 40

OR

Option 2

split 50/50, then wife pays back $10K she owes hubby

husband 50+10=60
wife 50-10=40


It comes out the same if you set up the problem correctly (so they must have skipped math class in your attorney's law school !) The fact that your attorney needs another opinion or two to figure this out is sad.


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anneteFut
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Reged: 09/17/11
Posts: 30
Max Cleanse Total Cleanse *DELETED* [Re: finz]
      #764369 - 10/07/11 09:38 AM

Post deleted by dsAdmin

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