What Happens to Real Estate in a Divorce?
For many people, the family home isn’t just their largest financial asset; it’s where they’ve built their lives, making it an especially emotional and complex part of the divorce process. At Thrive Family Law, we help clients navigate this part of a divorce with compassion, carefully considering the legal, financial, and emotional factors involved.
What’s the difference between marital and separate property?
In Colorado, property is divided through equitable distribution, which means assets are divided fairly but not necessarily equally.
The first step is determining whether real estate is marital property (acquired during the marriage) or separate property (owned before the marriage, inherited, or received as a gift). This can be more complicated than it seems. Even if one spouse owned the home before marriage, any increase in its value during the marriage may be considered marital and subject to division.
What usually happens to the family home in a divorce?
Once the home’s marital value is determined, there are a few main paths forward:
One spouse keeps the home. This typically involves refinancing the mortgage to remove the other spouse’s name and buying out their share of the equity. While this allows any children to stay in the home and offers stability, the buying spouse needs to be able to manage the new mortgage and upkeep costs.
Sell the home and split the proceeds. Many couples choose to sell the property and divide the equity. This can provide a clean financial break and allow each person to start fresh, though timing the sale and market conditions can make this challenging.
Defer the sale. In some cases, divorcing parents agree to delay selling the home—for instance, until children graduate from high school. This can reduce disruption for the family, but requires a clear plan for mortgage payments, maintenance, and eventual sale, and strong language to protect both parties. Due to this complexity, deferring the sale may not be feasible or advisable.
What About Investment or Vacation Properties?
Real estate beyond the family home, such as rental properties or vacation homes, also needs to be divided. A professional appraisal or financial expert can help ensure both parties understand the full picture before deciding how to proceed regarding these properties, as they may also come with rental income, unique tax implications, or other expenses.
How do I protect my interests?
Emotions often run high when it comes to real estate, but thoughtful planning and professional guidance can make all the difference. It’s important to rely on experts, such as financial experts, appraisers, and mortgage professionals, to understand your situation and make the best decisions. These experts will help you understand property valuation and equity, explore buyout or refinance options, evaluate tax implications and long-term financial impacts, and create realistic solutions that fit your post-divorce goals.
It’s also critical that you select the right real estate agent for any property related to your divorce. Because divorce adds significant complexity to the process, you want an expert on your side to help you navigate it.
Dividing real estate in a divorce can be complicated, but with the right guidance, you can make informed choices that set you and your family up for a stable future.
If you’re facing a divorce and unsure of what to do about your home or other real estate, our team at Thrive Family Law can help you understand your options and protect your interests every step of the way.
Reach out today to get started!
