Checklist – Divorce property

Dividing property during a divorce presents spouses with difficult questions—and that during an emotionally stressful time in their lives. What options are available for division, and what problems can you expect to encounter? Our checklist will help you keep track of everything in this situation.

There are essentially the following options for dividing divorce property: a) the couple sells the property, b) the couple retains the property as joint property, c) one of the partners acquires the property in full and takes it over, or d) the property is transferred to one or more children as a preliminary inheritance or gift. In practice, however, there is at least one catch with each of these options.

Sale

This usually makes sense, as the debts incurred to finance the property can be repaid and both partners receive their share of the proceeds from the sale as a basis for a new start
Small disadvantage: If loans are repaid before the end of the fixed interest period, the bank will demand a so-called early repayment penalty; if the couple lived in the property for less than ten years before the sale, speculation tax may be payable
Risk: If the couple cannot agree on a sale, for example because one of the partners wants to continue using the property, there is a risk of a partition sale, which usually has a negative impact on the proceeds of the sale

Renting

Renting is a good option if the property is to remain in the family so that, for example, the children can inherit it later and live in it
Small disadvantage: However, if you rent out the property, you will still have to take care of it, and repairs and administration can cost a lot of time and money
Risk: Renting is generally only worthwhile if the rental income at least covers the mortgage payments and if both partners agree on how responsibility for the property will be divided

Continued use

The partner remaining in the property pays rent to the other partner, or the rent is offset against maintenance payments due
Disadvantage: If the property has not yet been paid off, both partners remain liable for the repayment of the loans – however, from the bank's point of view, the debts are not shared, which means that if one of the partners becomes insolvent, the bank will recover the entire remaining debt from the other
Risk: If the repayment of the loans is no longer guaranteed, there is a risk of loss or foreclosure of the property, which would result in severe financial losses

takeover by one of the partners

Disadvantage: The partner who takes over the property must pay off their ex-partner and at the same time bear the living and maintenance costs and repay the outstanding loans alone
Risk: This often leads to financial overload

Donating the property to the child or children may be another solution. However, the same risks apply here if the property has not yet been paid off and if there are mutual claims for maintenance and equalization of gains.

Are you unsure about the best solution for your divorce property? Contact us! We will be happy to advise you.

Legal notice: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific case clarified by a lawyer and/or tax advisor.

Photo: © oli18/Depositphotos.coma

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