Texas Is a Community Property State
Texas is one of nine community property states in the U.S. This means that property acquired during the marriage — including the family home — is generally considered jointly owned by both spouses, regardless of whose name is on the deed or mortgage.
In most cases, this results in a 50/50 split of the net proceeds when the home is sold. However, a divorce decree can specify a different division if both parties agree or if the court determines otherwise based on circumstances.
Key implication:Because both spouses own the home, both spouses must agree to sell it and must sign all closing documents. One spouse cannot unilaterally list or sell the home without the other's consent.
Selling During an Active Divorce
You do not need to wait for the divorce to be finalized to sell your home. Many couples choose to sell during the divorce proceedings to avoid ongoing carrying costs, simplify asset division, and maintain the $500,000 capital gains exclusion available to married couples.
If both spouses agree on the sale, the process is straightforward:
- Both spouses agree on a listing price and sign the listing agreement
- Home goes live on HAR/MLS, offers come in
- Both spouses review and sign the purchase contract
- Home closes — lender paid off, remaining proceeds split per divorce agreement
If there is a pending divorce case, the court may need to approve the sale or the distribution of proceeds. Your divorce attorney should advise you on this.
If One Spouse Won't Agree to Sell
When spouses cannot agree on whether to sell the marital home, the law provides a mechanism: a partition lawsuit. A partition action asks the court to either physically divide the property (generally not possible for a single-family home) or order a forced sale with proceeds divided between the parties.
The court-ordered sale process typically works as follows:
- One spouse files a partition lawsuit in Texas district court
- The court appoints a receiver or trustee to manage the sale if necessary
- The home is listed at fair market value; both spouses can submit input on pricing
- Proceeds are distributed per court order after paying off the mortgage and costs
Partition lawsuits are expensive and time-consuming. Courts in Texas generally encourage mediation before resorting to forced sales. Consult a family law attorney before filing.
Options for the Family Home
Option A: Sell and Split Proceeds
The most common outcome. Home is sold, mortgage and selling costs are paid, and remaining equity is divided per the divorce agreement. Clean break for both parties.
Option B: One Spouse Buys Out the Other
One spouse keeps the home by refinancing the mortgage in their name alone and paying the other spouse their share of the equity. The departing spouse must be removed from both the deed and the mortgage obligation.
Option C: Deferred Sale (Nesting)
Both spouses agree to delay the sale — typically until children finish a school year or graduate. One or both spouses may continue living in the home during this period. This arrangement requires a detailed written agreement on expenses, maintenance, and sale timeline.
How to Maximize Sale Price During Divorce
Divorces are emotionally charged. When emotion bleeds into the sale process — pricing arguments, disagreements over repairs, sabotaged showings — the home spends more days on market and sells for less. Here's how to protect your financial outcome:
- Use a neutral listing structure. A flat fee MLS listing puts both spouses in the seller role equally, with no individual agent representing one side. This removes a potential conflict point.
- Get an independent appraisal.If both parties can't agree on price, a third-party appraisal provides an objective anchor that both attorneys can accept.
- Make basic repairs by agreement.Create a written list of agreed repairs before listing. Don't let repair disputes delay the sale.
- Stage the home professionally. If one spouse has already moved out, the home may be partially furnished. Professional staging helps regardless.
- Price right from day one. Extended time on market during a divorce only prolongs financial and emotional pain for both parties.
Tax Implications
The federal capital gains exclusion allows married couples filing jointly to exclude up to $500,000 in profit from the sale of a primary residence (owned and lived in for 2 of the last 5 years). After divorce, each individual can only exclude up to $250,000.
Timing matters significantly. If your home has appreciated by $400k+, selling before the divorce is finalized may be the more tax-efficient choice. Consult a CPA familiar with Texas community property rules and federal capital gains exclusions.
Also note: if one spouse receives the home as part of the divorce settlement and later sells it, their cost basis and time-in-residence rules may affect their capital gains calculation. This is a nuanced area — get professional tax advice specific to your situation.
Frequently Asked Questions
Selling During a Divorce? Let Us Help.
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