Real Estate

& Divorce

Introduction

Navigating real estate during divorce can be complex and emotionally challenging. Understanding the intricacies involved in dividing property and assets amidst a divorce is crucial. Whether you're selling a family home, dealing with investment properties, or considering refinancing options, we aim help you move forward with confidence and peace of mind.

The Essentials

The top four areas you need to know about that support a smoother transition and stability during divorce.

Critical Tools Checklist

A comprehensive checklist to ensure you're protected with all the right questions, safeguarding you from potential divorce pitfalls.

Resources

Divorce calculators tools and resources you need to navigate your property division and next steps division with precision

Connect with an Expert

Get expert support and personalized guidance so that you can tackle your unique challenges with confidence.

The Essentials

Divorce Real Estate Essentials

Divorce often means making complex decisions about real estate that can affect your financial future. By grasping how property division works and exploring your options, you can make strategic decisions about buying, selling, or retaining property, ensuring that you navigate this aspect of divorce with clarity and confidence.

Property Division

Understanding how assets like the family home, vacation properties, and investment real estate will be divided during the divorce process.

ESSENTIAL #1

ESSENTIAL #2

Mortgage Obligations

Determining who will be responsible for ongoing mortgage payments and how any joint mortgages will be addressed.

ESSENTIAL #3

Real Estate & Taxes

Considering the tax consequences of selling or transferring ownership of real estate assets, including capital gains tax and property tax considerations.

ESSENTIAL #4

Future Housing Arrangements

Considering the tax consequences of selling or transferring ownership of real estate assets, including capital gains tax and property tax considerations.

Click on each "Essential" tab above to explore answers in the four key areas. Each tab will provide valuable information to help you navigate through these important aspects step-by-step.

Property Division

Q: What factors are considered when dividing real estate assets?
A: Factors such as the value of the properties, contributions made by each spouse, financial needs, and any prenuptial agreements are taken into account. Additionally, the duration of the marriage and the earning capacity of each spouse may influence the division.

Q: How will the equity in our home be divided, and what factors will determine each party's share?
A: In Colorado, marital property is divided equitably, which may not necessarily mean equally. Factors such as each spouse's financial contribution, earning capacity, and non-financial contributions to the marriage are considered.

Q: How can we ensure that the division of real estate assets is fair and equitable for both parties?
A: Seeking the guidance of a divorce mediator or attorney experienced in Colorado family law can help ensure that the division aligns with legal requirements and each party's interests.

Q: What steps should we take to address any outstanding liens or debts associated with our real estate properties?
A: Conduct a thorough title search to identify any liens or debts on the properties and address them as part of the divorce settlement.

Q: Are there any legal restrictions or requirements we need to be aware of when selling or transferring ownership of real estate assets during divorce proceedings?
A: Yes, there are legal procedures for transferring ownership, including obtaining court approval for property division agreements and executing deeds.

Q: What happens if we jointly own other real estate properties, such as vacation homes or rental properties?
A: Similar to the family home, these properties will need to be evaluated for equitable division or a buyout option may be considered.

Mortgage Obligations

Q: If one spouse wants to keep the house, how will they buy out the other spouse's share, and what financing options are available?
A: The spouse retaining the home can buy out the other spouse's share by refinancing the mortgage in their name or offsetting the home's value with other assets. Consult a Certified Divorce Real Estate professional for guidance.

Q: Who will be responsible for ongoing mortgage payments and property maintenance during the divorce process?
A: Both parties are typically responsible for mortgage payments until the property is sold or ownership is transferred. Maintenance responsibilities may vary based on the divorce agreement.

Q: What if neither of us can afford the house on our own?
A: If neither party can afford the house, selling the property and dividing the proceeds may be the best option. Discuss this possibility and the process for selling the home, including how the proceeds will be divided.

Q: How do we handle an underwater mortgage (where the mortgage balance exceeds the home’s value)?
A: Discuss options for handling an underwater mortgage, such as a short sale, loan modification, or refinancing. Consider the long-term financial implications of each option and seek professional advice.

Q: Should we refinance the mortgage to remove one spouse's name?
A: Refinancing can be a way to remove one spouse’s name from the mortgage, making the remaining spouse solely responsible. This is often necessary to protect both parties' credit and financial interests. Ensure the remaining spouse qualifies for the refinance based on their income and credit score.

Q: How will the division of the mortgage debt be handled?
A: The division of mortgage debt should be clearly defined in the divorce settlement. Decide whether one spouse will take on the full mortgage debt or if it will be split in some way. Legal and financial advisors can help navigate this complex issue.

Real Estate & Taxes

Q: How does divorce affect capital gains taxes on the sale of real estate in Colorado?
A: If you sell your primary residence during or after a divorce, you may qualify for an exclusion of up to $250,000 of capital gains ($500,000 if married and filing jointly) provided you meet the ownership and use tests.*For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These resources provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Q: What happens to the mortgage interest deduction if I keep the house?
A: If you retain ownership of the home, you can continue to deduct the mortgage interest on your tax return, provided you itemize deductions and meet the necessary requirements. For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These resources provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Q: How is the transfer of real estate between spouses taxed in Colorado?
A: Generally, transferring property between spouses or as part of a divorce settlement is not considered a taxable event. It is typically covered under the tax-free transfer rules.For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These resources provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Q: What are the tax implications if one spouse buys out the other's share of the property?
A: The buyout itself is not taxable, but the purchasing spouse may face capital gains taxes in the future based on the original purchase price of the property.For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These resources provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Q: Can I deduct real estate taxes paid during the divorce process?
A: Yes, you can deduct property taxes paid on real estate that you own, provided you itemize deductions on your tax return. For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Q: What tax considerations are there if we decide to co-own the property post-divorce?
A: Co-owning the property post-divorce requires clear agreements on who can claim deductions such as mortgage interest and property taxes. This agreement should be documented in the divorce decree. For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These resources provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Q: Are there any tax benefits for selling the marital home as part of the divorce settlement?
A: Selling the marital home as part of the divorce may qualify you for the capital gains exclusion, provided you meet the IRS requirements for the exclusion.For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These resources provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Q: How do I handle property depreciation if the real estate was used as a rental property?
A: If the property was used as a rental, depreciation recapture rules will apply upon sale, and this could affect your capital gains taxes. Consulting with a tax advisor is recommended.*For the most current and accurate information regarding the tax implications of real estate during a divorce in Colorado, individuals should refer to the official websites of the Internal Revenue Service (IRS) and the Colorado Department of Revenue. These resources provide comprehensive federal and state tax information, including rules on capital gains, property transfers, and other relevant tax matters. Additionally, for legal guidance and detailed information specific to divorce laws and property division in Colorado, individuals can visit the Colorado Judicial Branch.

Future Housing Arrangements

Q: Should we consider selling our home before or after finalizing the divorce, and what are the pros and cons of each option?
A: The timing depends on individual circumstances. Selling before finalizing the divorce may expedite the process but can complicate negotiations. Selling after may provide more time for decision-making but may prolong the divorce process. Consulting with a Certified Divorce Real Estate professional can give you more specific answers based on your location and situation.

Q: Are there alternative housing options to consider post-divorce, such as renting, purchasing a new home, or exploring co-housing arrangements?
A: Yes, exploring alternative housing options can provide flexibility and financial stability post-divorce. Considerations such as affordability, location, and children's needs should be taken into account when making this decision. A Certified Divorce Real Estate professional will be able to help you to find out which path is right for you.

Q: How will future housing decisions affect my children's stability and schooling?
A: Moving to a new home can impact your children's schooling and social environment. Consider proximity to their current school, friends, and extracurricular activities. Stability is important for children during a divorce, so weigh the benefits of staying versus the potential disruption of moving.

Q: What are the implications of buying a new home post-divorce?
A: Buying a new home involves securing a new mortgage, which requires a good credit score and stable income. Factor in your new financial obligations, such as alimony or child support, and ensure you have sufficient savings for a down payment and closing costs. Consult a financial advisor to help navigate this process.

Essentials

Checklist

7 Step Real Estate Divorce Checklist

Know Ownership

Sit down together and pull out all the paperwork related to the property. Look for documents like the deed or title that specify who legally owns the property.

Understanding who legally owns the property will clarify each party's rights and responsibilities. It helps in determining how the property should be handled during the divorce proceedings.

Tips:

Make copies of all relevant documents for both parties.
Consider consulting with a real estate attorney for guidance on interpreting legal documents.

Know When to Get Help:

If disagreements arise over the interpretation of ownership documents or if communication becomes contentious, seek assistance from a mediator or legal professional to facilitate resolution.

Check Finances

Take a deeper dive into your financial situation. Look at your mortgage statements to see how much you still owe, check for any outstanding debts or liens on the property, and figure out how much equity you've built up.

Reviewing the financial details provides clarity on the current state of the property's finances. It helps in assessing the affordability of different options regarding the property, such as buying out or selling.

Tips:

Use online mortgage calculators to estimate potential buyout amounts or proceeds from selling the property.
Consider consulting with a financial advisor to understand the long-term financial implications of different decisions

Know When to Get Help:

If the financial situation is complex or if you're feeling overwhelmed by the financial aspect of the divorce, seek guidance from a financial planner or accountant to ensure you're making informed decisions.

Learn Market Value

Get an idea of what your property is worth in the current market. You can start by researching similar properties in your area that have recently sold or by getting a professional appraisal.

Knowing the market value helps in making informed decisions about the property's future. It ensures a fair distribution of assets and helps in negotiating a settlement during the divorce process.

Tips:

Attend open houses or viewings in your neighborhood to get a sense of local property values.
Request multiple appraisals to ensure accuracy and fairness.

Know When to Get Help:

If there's uncertainty about the property's market value or if negotiations stall due to disagreement on its worth, consider seeking assistance from a real estate agent or mediator to facilitate the process.

Talk Options

Sit down and have an open and honest conversation about what you want to do with the property. Discuss options like selling the house and splitting the proceeds, one of you buying out the other's share, or continuing to co-own the property. Consider the practicalities and emotional aspects of each option before making a decision.

Discussing various options allows both parties to voice their preferences and concerns. It facilitates reaching a mutually agreeable decision regarding the property, minimizing conflicts and misunderstandings.

Tips:

Use a mediator or therapist to facilitate discussions if communication becomes challenging.
Keep the focus on finding solutions rather than dwelling on past grievances.

Know When to Get Help:

If conversations about property decisions become emotionally charged or if you're unable to reach a resolution, consider seeking guidance from a therapist or divorce mediator to navigate the discussions constructively.

Keep Talking

Communication is key, especially during a divorce. Keep the lines of communication open with your ex-partner throughout the process. Be willing to listen to their perspective and try to find common ground, even if things get emotional.

Maintaining open communication fosters cooperation and reduces tension during the divorce process. It promotes understanding and enables both parties to work together towards a resolution regarding the property.

Tips:

Schedule regular check-ins to discuss progress and address any new concerns or developments.
Use "I" statements to express your own feelings and perspectives without assigning blame

Know When to Get Help:

If communication breakdowns persist or if discussions become unproductive, consider seeking guidance from a counselor or mediator to facilitate constructive dialogue and conflict resolution.

Plan Ahead

Once you've decided what to do with the property, start planning for the transition. If you're selling the house, create a timeline for putting it on the market and moving out. If one of you is buying out the other's share, work out the financial details and legal paperwork involved. Having a clear plan in place will make the transition smoother for both parties.

Creating a transition plan ensures a smooth and organized process for handling the property. It minimizes disruptions and uncertainties, providing a clear path forward for both parties post-divorce.

Tips:

Consider hiring a real estate agent with experience in handling divorce-related property sales for guidance and support.
Anticipate potential challenges and have contingency plans in place, such as temporary living arrangements if the property sells quickly.

Know When to Get Help:

If the logistics of transitioning the property become overwhelming or if legal complexities arise, seek assistance from a real estate attorney or mediator to ensure a smooth process and protect your interests.

Seek Support

Divorce is a challenging time emotionally, so don't be afraid to lean on friends, family, or a therapist for support. Surround yourself with people who care about you and can offer guidance and encouragement as you navigate the complexities of dividing property during a divorce.

Seeking emotional support helps in coping with the stress and challenges of the divorce. It provides comfort and guidance, empowering individuals to navigate the complexities of the divorce process with resilience and positivity.

Tips:

Build a support network of trusted friends and family members who can provide practical assistance as well as emotional support.
Consider joining a support group or seeking individual therapy to help process your emotions and gain perspective on the situation.

Know When to Get Help:

If you feel overwhelmed by the emotional toll of the divorce process or if you're struggling to cope with the challenges, don't hesitate to reach out to a therapist or counselor for professional support and guidance.

Resources

Mortgage Calculator

Home Affordability Calculator

Rent vs. Buy Calculator

Mortgage Buydown Calculator

Qualifying Loan Amount Calculator

Basic Budget Calculator

Calculators

Real Estate

& Divorce

Introduction