Selling the family home
during separation

Sometimes keeping the family home is not practical, affordable, or desirable for either party. In these situations, selling the property and splitting the proceeds is often the cleanest path forward. But selling a home during separation involves more moving parts than a standard property sale. The timing, the decision making, the legal requirements, and the financial implications all need to be managed carefully.

This guide walks through the entire process from the perspective of someone going through it, with practical advice on each stage.

Who decides to sell?

If both parties agree to sell, the process is relatively straightforward. You jointly instruct a real estate agent, agree on a sale strategy, and work together (or through your lawyers) to manage the process. Most sales during separation happen this way.

If one party wants to sell and the other does not, the situation becomes more complex. As joint owners on the title, both parties must consent to the sale. One party cannot unilaterally list the property or accept an offer without the other's agreement.

When agreement cannot be reached

If you cannot agree, your family lawyer can attempt to negotiate a resolution. If negotiation fails, either party can apply to the Family Court for an order directing the sale of the property. The court will consider a range of factors before making such an order, including:

• Whether children are living in the home and the impact of a sale on their stability
• Whether one party has the financial capacity to buy the other out
• The overall property settlement and whether a sale is the most practical way to achieve a fair outcome
• Whether delaying the sale would cause financial hardship to either party

Court orders to sell are not uncommon, but they do take time. The application, hearing, and enforcement process can add several months to the timeline. Wherever possible, a negotiated agreement to sell is faster, cheaper, and less stressful for everyone involved.

Choosing a real estate agent

Selecting a real estate agent during separation requires some diplomacy. Both parties need to feel comfortable with the agent and confident that they will act in the best interests of both sellers, not just the one who made the initial introduction.

Practical approaches

• Agree on a shortlist together. Each party nominates two to three agents. You both attend the appraisals and agree on one agent.
• Use your lawyers. If direct communication is difficult, your lawyers can manage the agent selection process on your behalf.
• Appoint an independent agent. Choose an agent that neither party has a prior relationship with. This removes any perception of bias.

The agent agreement should be signed by both parties on the title. Ensure the listing terms, marketing budget, and sale strategy are agreed in writing before the property goes to market.

Timing the sale with your settlement

One of the most important decisions is whether to sell before or after your property settlement is finalised. Both approaches have advantages.

Selling before settlement is finalised

• You know the exact sale price, which removes uncertainty from the settlement negotiations
• The proceeds can be held in a trust account until the settlement terms are agreed
• Neither party needs to service an ongoing mortgage during protracted negotiations
• It may accelerate the overall settlement process

Selling after settlement is finalised

• The terms of the split are already agreed, so there is no ambiguity about who receives what
• Both parties can plan their next steps with certainty
• The sale can be timed for market conditions rather than legal deadlines

Your family lawyer can advise on which approach is more appropriate given your specific circumstances. From a finance perspective, the key consideration is that both parties remain jointly liable on the mortgage until the property is sold and the loan is discharged.

The sale process step by step

Splitting the sale proceeds

The net proceeds from the sale are calculated as follows:

• Sale price
• Less: outstanding mortgage balance
• Less: real estate agent commission
• Less: conveyancing and legal costs
• Less: marketing costs (if not prepaid)
• Less: any other costs of sale (eg. building repairs required by the contract)
• Equals: net proceeds available for distribution

How the net proceeds are divided depends entirely on your property settlement agreement. The split does not have to be 50/50. It is determined by the same factors that govern the overall property settlement: the contributions each party made during the relationship (both financial and non financial), each party's future needs, and what is just and equitable in all the circumstances.

If the settlement terms are not yet finalised when the property sells, the net proceeds can be held in a solicitor's trust account until the split is agreed or ordered by the court.

Capital gains tax and the main residence exemption

One of the significant advantages of selling the family home rather than an investment property is the main residence CGT exemption. If the property has been your main residence for the entire period of ownership, the sale is generally exempt from CGT entirely.

When the exemption may not fully apply

There are circumstances where the full exemption may not be available:

• One party moved out and the property was rented. If one party left the home and it was subsequently rented before the sale, the period of rental use may attract a partial CGT liability.
• The property was used to produce income. If part of the home was used for business or rented out (such as a home office that was claimed as a tax deduction), a partial CGT liability may arise.
• Extended period between separation and sale. Under certain circumstances, a former main residence can continue to be treated as your main residence for CGT purposes for up to six years after you move out (the "six year rule"), provided it is not rented during that time. If it is rented, the six year rule still applies but the rental period may attract partial CGT.

Bridging finance: buying before you sell

Some separating clients need to secure their next property before the family home is sold. This might be because the children need housing stability, because rental availability is limited, or because a great property has come on the market and waiting is not practical.

Bridging finance allows you to purchase your new property while you still own the existing one. The bridge covers the gap between buying and selling.

How bridging loans work

A bridging loan is structured as a short term facility, typically with a maximum term of 6 to 12 months. During the bridging period, you make interest only repayments (or in some cases, the interest is capitalised and added to the loan balance). Once the existing property is sold, the bridging loan is repaid from the sale proceeds and you transition to a standard home loan on the new property.

Is bridging finance suitable during separation?

Bridging loans add complexity and cost, and they carry the risk that the existing property may not sell within the expected timeframe. During separation, there is the additional consideration that both parties may need to agree on the sale terms and timing. A broker can assess whether bridging finance is suitable for your circumstances, or whether alternative approaches (such as renting temporarily) would be more appropriate.

What happens if the property sells for less than expected

If the property sells for less than the agreed value used in your settlement calculations, the impact depends on the terms of your agreement. In some cases, the settlement is based on the actual sale price, so both parties share the shortfall proportionally. In other cases, the settlement was based on an agreed value and the shortfall falls disproportionately on one party.

This is why realistic valuations matter. Building your settlement terms around an optimistic or inflated property value creates problems when reality does not match expectations.

Mortgage repayments during the sale period

Until the property is sold and the mortgage is discharged, both parties remain jointly liable for the repayments. Your legal agreement should specify who is responsible for making the mortgage payments during the sale period. Common arrangements include:

• The party living in the home makes the payments
• Both parties contribute equally
• Payments are made from a joint offset or redraw account

Whatever the arrangement, ensure it is documented in your legal agreement rather than left as an informal understanding. If repayments are missed during this period, it affects both parties' credit histories.

Jason Given

Director & Mortgage Broker · MFAA Member · MFPA Designated
Lendology

Jason specialises in separation finance, helping clients across Australia refinance, restructure, and move forward after relationship changes. He works alongside family lawyers and financial advisers to ensure the finance side is handled with care.

Last reviewed: June 2026

Jason Given and Steve Chin

Licensed mortgage brokers · MFPA designated · MFAA members · Australia-wide

We are not just explaining the process. We arrange the actual finance: refinancing into your sole name, funding a partner buyout, or setting up a new loan independently after settlement. We work with a panel of over 60 lenders to find the one that fits your situation.