Updated October 2026
CM Law’s Ultimate 50 Things You Need to Know About Property Settlement During Divorce | 46
Property settlements during divorce or separation often involve the family home. When neither person can afford the mortgage, repairs and other running costs, delaying a decision can reduce the equity available to both. A negotiated sale may be the most practical solution, but refinancing, renting or a carefully funded deferred sale should also be considered.
For NSW couples, the Federal Circuit and Family Court of Australia generally deals with family law property disputes. The aim is a just and equitable settlement based on the whole financial picture. Keeping the home is not guaranteed, and selling it does not automatically mean dividing the proceeds equally. This article is current as at 19 October 2026.
1 Work out the real cost of keeping the property
Prepare a monthly budget covering mortgage repayments, council and water rates, insurance, strata levies, essential repairs and utilities. Include each person’s separate housing costs and the children’s expenses. Check upcoming loan changes, arrears and whether savings are being used to meet ordinary bills.
Obtain a current mortgage payout estimate and reliable property valuation. Sale price less the loan balance is only a starting point: agent’s commission, legal costs, discharge charges and any applicable tax can reduce the amount available. If the proceeds will not cover the debt, obtain advice about the shortfall and the lender’s requirements before committing to a sale.
The Court’s financial disclosure guidance requires relevant information to be exchanged. Share bank statements, loan documents, income records and invoices. Neither person should have to assess affordability from unsupported estimates or incomplete account balances.
2 Compare the available options
Sell the property and preserve the remaining equity
Selling can release both parties from an unaffordable property and allow a more manageable housing arrangement. Agree on the agent, marketing budget, sale method, access for inspections, minimum acceptable terms and responsibility for expenses until settlement. Specify how disagreements about offers will be resolved.
The sale can sometimes occur before the final property division is settled, with the net proceeds held in a solicitor’s trust account pending agreement or further orders. The amount each person ultimately receives depends on the settlement. Include realistic moving arrangements, particularly where children live in the home.
Transfer the property if one person can genuinely afford it
A transfer may become feasible if one person can refinance, receive other funds or negotiate an affordable adjustment involving other assets. It should be supported by actual borrowing capacity and a sustainable budget. An intention to obtain finance is not the same as lender approval.
Transferring ownership does not automatically release the departing person from the mortgage. Arrange the required lender approval, discharge or refinancing and release from liability. Set a deadline and an alternative sale process if finance cannot be obtained. If neither person can service the debt, changing the name on the title does not solve the problem.
Consider a deferred sale or temporary shared ownership
A deferred sale may provide time to organise housing or accommodate children’s needs, but only if the holding costs can be met. Record who occupies the home, who pays each expense, how repairs are approved, and when the arrangement ends. Include a response to missed payments. An unfunded delay can simply produce a larger debt.
Rent the property if the numbers support it
Rental income may help, but compare net rent with mortgage payments, management fees, insurance, repairs and periods without tenants. Both parties also need somewhere affordable to live. Check lender and insurance requirements, tenancy obligations and tax consequences. Renting is a temporary option only where the expected income and responsibilities are realistic.
3 Check the stamp duty exemption before dismissing a transfer
Transfer duty, commonly called stamp duty, should not automatically rule out one person retaining the home. Revenue NSW explains the relationship breakdown exemption. A qualifying transfer of existing matrimonial or relationship property to a former spouse under family law orders can be exempt. Consent orders can therefore be relevant when structuring a transfer.
The exemption has conditions and requires the appropriate assessment and supporting documents. Certain qualifying agreements can also support it; court orders are not the only possible pathway. It does not generally exempt the purchase of a replacement home from an unrelated seller. Refinancing, registration and legal costs still need to be budgeted for.
Christine on looking beyond an assumed stamp duty bill
When stamp duty came up in our discussion, I said not to let it put them off before we checked the exemption. People can assume that taking over their former partner’s share means paying another large duty bill. A qualifying transfer under family law orders can be exempt in NSW, so that assumption can make an option look more expensive than it really is.
My next question is whether the mortgage and ongoing bills are affordable. Removing a duty bill can help, but it does not make the bank approve a loan or pay the rates. I want the decision based on the actual costs, with the paperwork checked properly. If the numbers still do not work, we need to consider a sale rather than promise that an exemption will save the house.
4 Act early if repayments are becoming unmanageable
Contact the lender’s hardship team as soon as difficulties arise. ASIC’s Moneysmart mortgage guidance explains how to request help and consider repayment arrangements. Any change needs to be confirmed with the lender. Moving out, separating or making a private agreement does not by itself cancel obligations under a joint loan.
Where safe and appropriate, negotiate or use mediation to agree on an interim plan. Keep records of payments and essential repairs. Avoid allowing insurance to lapse, making major improvements without agreement, or treating mortgage payments after separation as an automatic entitlement to a particular percentage of the property.
5 Obtain orders if agreement is not possible
A solicitor can advise whether interim orders, including a sale order, should be sought while the wider settlement continues. Under the property framework applying from 10 June 2025, the Court considers property and liabilities, contributions, and current and future circumstances. Children’s care and housing needs matter, as does the economic effect of family violence where relevant. Orders must be just and equitable.
If you agree, properly drafted consent orders can record the sale or transfer and division of assets. You do not need to wait for divorce to address property. Usual application deadlines are 12 months after divorce becomes final or two years after a de facto relationship ends. Obtain advice promptly about exceptions if a deadline is approaching or has passed.
A real case about whether retaining the home was realistic
In Neumann & Haas [2020] FamCA 1076, the wife sought an interim sale of the former matrimonial home, while the husband wanted to retain it. The wife was meeting the property expenses. The husband was unemployed and produced no documents supporting his proposed refinancing arrangements.
Justice Tree examined the assets, mortgage and realistic financing prospects, finding that the husband’s prospects of retaining the property were effectively nil. The Court ordered steps to complete the sale and required him to vacate on the specified conditions. Rates, the mortgage and sale expenses were to be paid first, with the remaining proceeds held in trust pending further orders. The lesson is to support a proposal to keep the home with evidence; the case does not establish an automatic sale rule.
Verified figures on household cost pressures
The ABS June 2026 living cost release, published on 5 August 2026, reports a 3.7% annual increase in employee household living costs. Its mortgage interest charges component rose 8.2% in the June quarter. These national indicators provide context for tighter budgets; they do not measure how many separating couples must sell. The 8.2% figure is a change in interest charges, not an increase of 8.2 percentage points in mortgage interest rates.
Make a sustainable plan for both households
Contact CM Lawyers to assess the sale and transfer options, check any duty exemption and prepare enforceable arrangements. Bring the loan statements, property expenses, income details and any existing agreements so the discussion starts with a reliable financial picture.
Key resources
- Family law property changes from 10 June 2025 — Attorney-General’s Department explanation of the property settlement framework.
- Financial and property overview — Court information on agreements, applications and time limits.
- Duty of disclosure and applying for consent orders — Financial information and formalising an agreement.
- Marriage or relationship breakdown duty exemption — Revenue NSW eligibility and documents, updated 27 May 2026. See also the section 68 guide.
- Transfer duty exemptions after separation — Legal Aid NSW guidance.
- Problems paying your mortgage — ASIC’s Moneysmart guidance on hardship assistance and next steps.
- Neumann & Haas [2020] FamCA 1076 — full judgment — The full judgment on AustLII, including paragraphs 30 and 34–39 and the sale orders.
- Selected Living Cost Indexes for June 2026 — ABS release dated 5 August 2026; employee household costs and mortgage interest charges.
