Yes, you can sell a house while you are going through a divorce in Kentucky. It happens all the time. The hard part is not the sale itself. It is agreeing on who decides what, and in what order. This page walks through the rules and the usual steps in plain English.
How Kentucky divides the house
Kentucky uses what is called equitable distribution. That means the court divides marital property in a way it finds fair, which is not always a 50/50 split. The rule is in Kentucky Revised Statutes (KRS) section 403.190.
Property either spouse acquired during the marriage is presumed to be marital property, no matter whose name is on the title. The court first sets aside each spouse's separate property, then divides the rest.
For the house, that usually ends one of three ways:
One spouse keeps the house and buys the other one out, paying their share of the equity.
The house is sold and the proceeds are divided.
A judge orders one of those two outcomes when the spouses cannot agree.
Kentucky also requires a waiting period of 60 days before a divorce decree can be entered, even when both spouses agree on everything. So there is time to plan a sale.
Both spouses may need to sign
Kentucky recognizes a spouse's right in the other spouse's real estate, called dower and curtesy. Because of that, a spouse who is not on the title generally has to join in signing a deed or a mortgage. So even if only one name is on the title, plan on both spouses signing the listing paperwork and the closing documents.
What happens to the mortgage
A divorce decree decides who keeps the house. It does not change the loan. The lender still holds everyone who signed the mortgage responsible, no matter what the decree says.
There are two clean ways to deal with that. The spouse who keeps the house refinances into their own name, which pays off the old loan. Or the house is sold, and the loan is paid off at closing out of the sale proceeds.
How a sale usually works
Agree on one real estate agent you both trust. Both spouses sign the listing agreement.
Agree on the price strategy and the showing schedule, in writing if you can. Keeping the house clean and easy to show matters more than almost anything else.
When you get an offer, both spouses review it and both sign.
At closing, the closing company pays off the mortgage and the costs of selling, then pays each person their share of what is left, following your agreement or the decree.
Taxes to know about
A deed that moves the house from one spouse to the other through a court order in a divorce is exempt from the Kentucky transfer tax. A normal sale to a buyer is taxed as usual: fifty cents per $500 of the price, paid by the seller. See How Much Is the Kentucky Real Estate Transfer Tax? for the math.
On the federal side, a home seller can often exclude up to $250,000 of profit, or $500,000 on a joint return, if the home was their main residence for two of the last five years. How that applies when a marriage is ending depends on your timing, so ask a CPA before you pick a closing date.
The numbers behind your price
Pricing the house right matters more when two people have to agree. For where the market sits now, read What Is the Median Home Price in Louisville? and Is Louisville a Buyer's Market or a Seller's Market? For every cost on the seller's side of the closing statement, see How Much Are Closing Costs in Louisville, Kentucky?
For a longer walk through the process, read the Winner Realty guide to selling a house during a divorce in Kentucky.
This is general information, not legal or tax advice. Talk to your divorce attorney before you list. Questions about the sale side? Text or email me at (502) 305-8915 or [email protected].
Rob Bergeron, Owner-Realtor, Winner Realty