May 20th 2022

It might sound like a line from a book by Dr. Seuss, but “Can I legally sell my house to my spouse?” is a legitimate question. It comes up particularly in the cases of divorce—before the deal is done, of course. Selling your home to your spouse is one way for couples to divide their assets as they split up. But there are also other instances when it can be a good idea.

Is selling your house to your spouse legal?

The quick answer for this question is yes, it is legal to sell your home to your own spouse.  Often in a divorce, one party is instructed by the court to buy the other out.

Tax implications

That said, there are a few things to be aware of before selling your house to any family member. For one, consult an accountant to see if the sale is likely to result in a hefty tax bill.

The laws on selling your house to your spouse vary on where you live, and may also differ depending on whose name is on the mortgage.

You also need to check and see if both spouses are on the mortgage. If they are, the lender will normally insist that both spouses remain on the title.

Alternatives to selling your house to your spouse

Rather than selling the home to your spouse, a better solution may be to transfer the property for free, Morais says. The unlimited marital deduction allows U.S. citizens to gift money or property to their spouse (who also must be a U.S. citizen) without incurring either a federal or state gift tax.