Dividing assets during a divorce can be complicated, especially when you have different types or property or valuable property. If you own rental property, you will want to protect your financial interests, but you might be confused about your legal rights and options. An experienced divorce lawyer from Boyd Law Attorneys at Law can review your situation and make recommendations, based on your particular situation, finances, and preferences.
The first step to determining what happens to your rental property during a divorce is to correctly classify it. Is the property community property or your separate rental property? Community property is subject to an equal split during a divorce. Separate property is usually yours alone to keep.
Generally, if the property was obtained during the marriage, it is considered community property. However, there are exceptions when property obtained during the marriage is separate property, such as when:
- It was a gift or inheritance
- You obtained it with separate property
- You obtained it subject to a valid marital agreement
Separate rental property you brought into the marriage generally continues to be separate property during the marriage unless you have changed title to the property or transmuted the property.
After you determine the property that is subject to division during the divorce, the next step is to determine its value. Knowing the value of the property can help with the process even if you do not plan on selling it because you may need to exchange property of similar value to balance out the separation agreement. You may be able to determine the value of property by obtaining a property appraisal or having a realtor give an estimated value based on comparable homes.
Options for Rental Property During Divorce
You may have several options for dealing with your rental property during your divorce. The best option will depend on your particular situation and objectives. Some options may include:
Continue to Rent the Property
The easiest solution may be to maintain the status quo. You may be able to continue renting the properties to your existing tenants. If you and your spouse jointly own the property, you may split the proceeds. This option may be best if you rely on the rental income, you might lose money by selling in the current market, or you want to avoid expensive capital gains taxes.
Split the Properties with Your Spouse
Another option may be to split up the properties with your spouse. If you have multiple properties and can equally split up the property based on their respective values, this may be a viable option. Providing property to your spouse where they can live may also help you avoid more cumbersome arrangements, such as having to pay alimony.
Buy Out Your Spouse’s Interests
If you do not want to remain financially entangled with your spouse, you may choose to buy out your spouse’s share or contribution in the marital property. This option may require you to refinance the properties in only your name.
Sell the Property
Another option is to liquidate the rental properties. By selling the properties, you may be better able to reach a fair resolution of splitting up assets during the divorce.
Our Attorneys Can Help
If you would like legal advice and representation for your California divorce, reach out to the knowledgeable family lawyers at Boyd Law. Contact us today to arrange a confidential consultation.