If you are considering or going through divorce, you might be wondering how your various property will be divided. Rental property often provides additional income you rely on to keep your finances on track, so how it is treated during the divorce process can profoundly impact your life. Here is what you need to know about this legal issue.
Is the Rental Property Separate or Marital Property?
The court must first determine whether the rental property is classified as separate or marital. Property is separate when a spouse acquired it:
- Before the marriage
- Through an inheritance or gift
- In accordance with the terms of a valid prenuptial agreement
- After becoming legally separated
A spouse has the exclusive right to retain the property under these circumstances, including if it is a rental property. However, if the property value increased during the marriage, this increase can be considered marital property, and the non-owning spouse may have a right to receive a portion of the value’s difference.
All other property is generally marital property and subject to division in the divorce. This is true even if the property is deeded in only one spouse’s name.
Options for Dealing with Rental Property in a Divorce
If the rental property is considered marital property, the spouses can reach an agreement regarding how to deal with the rental property. Options may include:
- Selling the property and dividing the sales price equally after paying off any mortgages and liens
- Exchanging property of similar value for the spouse’s share in the rental property
- Continuing to own and manage the property agreement together
- Refinancing the property so that one spouse can buy out the other spouse’s share
There may be other options that would work for you and your spouse under your specific circumstances. As long as you reach an agreement that the court interprets as an equitable division, the court can approve it.
However, if you and your spouse are unable to agree on how to handle your rental property division, the court can make a decision based on what it considers equitable. Often, this means that the married couple is ordered to sell the property, which is not always in their best interests. Alternatively, the court could award the property to just one spouse.
Need Help with Dealing with Rental Property During Divorce? Call Us Today
Determining how to deal with rental property during divorce can be challenging. You and your spouse may disagree on what is best. If the property is sold, you will need a full appraisal to determine the property’s value. You may also need to know if the property’s value increased if this is considered marital property.
An experienced complex property division lawyer from Stahly Mehrtens Miner LLC can discuss property division and tax implications of proposed resolutions concerning your rental property and other marital property. If you decide to hire us, we can try to negotiate an agreement that is in your best interest or formulate an argument to the court regarding your proposed resolution to divide the rental property. Contact us today for a confidential consultation. Call us at (855) 963-4968.