When it comes time to negotiate a fair settlement, make sure to account for the true value of the associated property. For example, if you determine that the fair market value of the property is $300,000 and the associated mortgage on the property is $230,000, the amount that you will be negotiating over is approximately $70,000.
If you plan to transfer the home and you have unpaid real estate taxes of $5,000, you will want to deduct that from the $70,000, which would leave $65,000 to negotiate.
If you plan to sell the real estate, you will want to account for the associated sales costs which would include sales commissions of $18,000 (6% of the sales price – $300,000 x 6%), other fees associated with the sale (i.e. title fees) and any other outstanding assessments that will the net amount. If the case above, you would then have around $47,000 ($65,000 – $18,000) to negotiate.
If you are over the capital gain exclusion limit or have used your exclusion in the past, you would also want to consider the potential tax impact of the sale as well, thus reducing the amount to negotiate further.
