Who Keeps the House in Divorce NSW — Your Three Options
Who Keeps the House in Divorce NSW — Your Three Options
The family home is usually the largest single asset in an NSW property settlement. How you deal with it shapes everything — your post-separation housing, your borrowing capacity, your stamp duty exposure, and the overall balance of the split. There are three structural options, and each has financial consequences that go well beyond the sale price.
Option 1 — Sell and Split the Proceeds
The simplest approach: list the property on the open market, discharge the mortgage from the sale proceeds, pay agent commissions and legal costs, and divide the net proceeds according to the agreed percentage split.
This works well when:
- Neither party can afford to keep the property alone
- Both parties want a clean break
- The property market is favorable
- There are sufficient other assets to fund alternative housing
The consent orders or BFA should specify the sale mechanics clearly — who appoints the agent, the listing price or reserve, the timeline for sale, and what happens if the property doesn't sell within that period.
Option 2 — Spousal Buyout and Refinancing
One spouse keeps the house and buys out the other's equity share. This is the most common outcome when one party wants to maintain stability (especially when there are school-age children) and has the income to service the mortgage alone.
The process:
Calculate the buyout amount. Take the current market value (supported by a sworn valuation or comparable sales evidence), subtract the outstanding mortgage, and apply the agreed percentage split. If the home is worth $1.2 million with a $400,000 mortgage, the net equity is $800,000. In a 55/45 split, the departing party's share is $360,000.
Secure finance approval. The retaining spouse must demonstrate to a commercial lender that they can independently service the existing mortgage plus the buyout payment. The bank assesses their income, expenses, and borrowing capacity entirely on their own financial position. If they can't qualify, this option doesn't work — regardless of what the consent orders say.
Release the departing spouse from the mortgage. This is critical. Until the departing spouse is formally released from the mortgage covenant, they remain jointly and severally liable for the full debt. If the retaining spouse defaults, the bank can pursue the departing spouse for the entire balance. And as long as a person's name is on an active mortgage, that full debt obligation counts against their borrowing capacity — effectively preventing them from buying a new home.
Transfer the title. Once the new finance is in place, the title transfer is processed electronically through PEXA by a licensed NSW conveyancer or solicitor. Self-represented parties cannot access PEXA directly.
Option 3 — Deferred Sale (Exclusive Occupancy)
One spouse (typically the primary caregiver) is granted exclusive occupancy of the home for a defined period — often until the youngest child turns 18 or finishes high school. After that, the property is sold and the proceeds divided.
This preserves stability for children but creates long-term financial entanglement. Both parties remain on the title and often on the mortgage. The consent orders need to address:
- Who pays the mortgage, rates, and insurance during the occupancy period
- Who funds maintenance and repairs
- How the final sale is triggered and managed
- Whether the occupying party's share is adjusted for the benefit of exclusive use
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The NSW Stamp Duty Exemption
Transferring real estate in NSW normally triggers transfer duty (stamp duty) based on the property's market value — potentially tens of thousands of dollars. But Section 68 of the Duties Act 1997 (NSW) grants a complete exemption for transfers between separating spouses, provided the transfer is made pursuant to:
- Sealed consent orders from the FCFCOA
- A binding financial agreement under the Family Law Act
- A written separation agreement accepted by the Chief Commissioner of Revenue NSW
Without a formal family law instrument, you'll pay full stamp duty. This is one of the most expensive mistakes separating couples make — an informal property transfer on a $1 million property in NSW can trigger over $40,000 in transfer duty.
To claim the exemption, your conveyancer submits the "Application for Exemption or Refund: Break-up of a Marriage or De Facto Relationship" along with a certified copy of the sealed orders or BFA through the Electronic Duties Returns system. Revenue NSW issues a nil assessment, and the title transfer proceeds through PEXA without duty.
CGT Rollover Relief
Under Subdivision 126-A of the Income Tax Assessment Act 1997, property transfers between separating spouses receive automatic CGT rollover relief. The receiving spouse takes over the original cost base, deferring any capital gains tax liability until they eventually sell the property.
This rollover applies automatically when the transfer is made under a court order or BFA. No election or application is required — but it only works for genuine relationship breakdown transfers, not commercial transactions dressed up as settlements.
The PEXA Transfer Process
All property transfers in NSW are processed electronically through PEXA. Your conveyancer prepares and lodges:
- Transfer Form 01T (if there's a monetary exchange) or 01TWC (transfer without consideration)
- Notice of Sale form notifying council and water authorities
- Purchaser/Transferee Declaration for Revenue NSW
The entire process is digital. Once the duties exemption is confirmed and the bank releases the title (if refinancing was required), registration typically completes within a few business days.
The NSW Divorce Financial Split Guide includes a real property decision worksheet that helps you compare the financial outcomes of all three options — including stamp duty savings, refinancing feasibility, and the long-term cost of deferred sale.
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