What Is Buyout (Equity Buyout)?
Paying your spouse their share of an asset's equity so you can keep it.
An equity buyout in divorce is when one spouse pays the other for their share of a jointly owned asset — most commonly the family home, but also applicable to businesses, vehicles, or other property. For a home buyout, the buying spouse typically needs to pay half of the home equity (in equitable distribution states, the split may differ). For example, if a home is worth $400,000 with a $200,000 mortgage, the equity is $200,000 and the buyout would be approximately $100,000. The buying spouse can fund the buyout through refinancing (taking cash out), trading other assets of equivalent value (such as retirement accounts), or through a combination. The buyout amount should also account for closing costs and potential capital gains tax implications if the home is later sold.
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View CalculatorsThis definition is for general educational purposes only and does not constitute legal or financial advice. Laws vary by state and change frequently. Consult a qualified professional for guidance specific to your situation.
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