How Should Divorcing Couples Divide Rental Properties?

During the course of their marriage, many couples decide to invest in real estate, purchasing rental properties and earning incomes off of them. But these real estate holdings can make the property division process more difficult if these couples decide to get divorce.

The following are some of the key considerations to make when dividing shared rental properties between divorcing spouses:

  • Valuation: One of the first steps you should take is to value your real estate, including the land and the building itself. To do this, a real estate broker must analyze sales of nearby and comparable properties. If the rental property has positive cash flow, it will add to its value.
  • Potential sales: In many situations, the couple may choose to sell the property. If it sells for less than the mortgage balance, the owners may need to liquidate other shared assets to pay the rest of it off. If there is a profit from the sale, both spouses will usually divide it evenly.
  • Tax issues: Location and state tax laws can have a significant impact on the value of a piece of real estate. In addition, selling a rental property may have negative tax consequences for one or both parties, so it’s important to speak with a lawyer before moving ahead with any transactions.

Dividing assets like rental properties can be a very difficult and contentious process, but it helps to work with a skilled and experienced legal professional. If you need sound guidance related to property division or another tough issue, consult a dedicated divorce attorney with Bryan L. Salamone & Associates.

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