Family Law Questions? Ask a Family Lawyer Online.
If your sister gifted you the house, then the house would remain yours. If your sister meant to gift BOTH of you the house, then it would be considered the marital home and is subject to division in the divorce.
If the house is a marital asset and you want to keep the house and your wife agrees to that, then you can "buy her out." In otherwords, you can pay her or give her something else that would be equal to half her share of the equity in the home.
If your wife doesn't agree to this, then she can ask the court to partition the home and you're correct, the judge could order it sold and the equity divided between the two of you. Ultimately, if your wife doesn't agree with what you want to do, it will be up to the judge to determine what to do.
Either you or your wife can file for divorce--it does not matter who files first at all.
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