Property division is often a contentious issue when divorcing, as hard-earned assets are at stake. However, this process does not always have to be complicated. Sometimes, couples can reach an agreement as they are willing to exchange one item for another. For example, you may be willing to part ways with the dining room set as long as you get to keep the bedroom furniture. However, if you and your spouse own rental properties, it can make the division of assets more complex. Please continue reading to discover how rental properties are handled during property division and how a Rockland County Divorce & Separation Attorney can help you understand your legal options.
How are rental properties handled during a divorce?
In today’s society, rental properties can be a lucrative investment. As such, they can be valuable assets during divorce negotiations. However, in some cases, rental properties can financially drain couples, resulting in significant debts if not appropriately managed. In such cases, rental properties during divorce negotiations can represent debts you and your spouse must pay. Whatever the case, you must first determine whether the rental property is considered marital or separate.
If you acquired the rental property before the marriage and your spouse did not contribute to the property in any way, it will be considered separate property and is therefore not subject to equitable distribution. New York is an equitable distribution state meaning that any assets accumulated during the marriage are to be split fairly between each party. However, that does not necessarily mean an even 50/50 split. If the rental property was purchased during the marriage, it is considered marital property. Ultimately, each spouse will then be entitled to a share.
How are they divided?
Fortunately, there are various ways in which couples can divide and handle rental properties during their divorce. If your rental properties are a great source of income and you do not want to sell them, you could continue to rent and split the proceeds. Although it may seem odd to get into business with your former spouse, it could potentially lead to significant financial gain. If you can reach a mutual agreement on a partnership for your rental properties, during negotiations, you can create a business account in which the assets will be split after house and business costs have been covered. You may divide the properties if you do not want to continue a business partnership with your spouse.
To split your properties, you must determine a fair way to divide the properties so that each party receives an equivalent share. This can be difficult because most properties do not have the same value. If this doesn’t seem the right option for your particular situation, one party can buy out the other if they want to keep ownership of the rental properties. However, this is only possible if one spouse allows you to buy them out of their property shares. These options can also be costly and could put you underwater, as buying them out may financially drain you. Furthermore, you can sell the properties and then split the proceeds.
As you can see, several options exist for dividing rental properties during a divorce. Before making any critical decisions regarding rental properties, discussing your options with a knowledgeable attorney from The Law Office of Peter L. Jameson, PLLC, is in your best interest. Our firm can help you safeguard your hard-earned assets during property division.