Checklist: Real estate during divorce
There are usually four options for dealing with joint property in a divorce. It can be sold or rented out. One of the former partners can take it over and pay the other out or pay them rent.
Selling the property
- Advantage: makes sense if debts need to be paid off, for example if the mortgage has not yet been paid off
- Disadvantage: if the loan is repaid before the end of the fixed interest period, many banks demand an early repayment penalty
- Important: Speculation tax may be payable if the property has been lived in for less than ten years prior to sale
- Caution: If the two parties cannot agree, there is a risk of foreclosure, which often has a negative impact on the sale proceeds
Renting out the property
- Advantage: makes sense if the property is to remain in the family
- Disadvantage: as a landlord, you have to take care of the property management, which can lead to disputes between divorced couples
- Important: Managing a property often only works if the divorcing couple still get along well and responsibilities can be divided
- Please note: if the mortgage has not yet been paid off, the rental income should be sufficient to cover the monthly payments
One of the former partners takes over the property
- Important: whoever takes over the property must be able to cover all costs – the other partner must be paid out, and if the mortgage has not yet been paid off, these costs must also be covered, as must living and maintenance costs
- Caution: there is often a risk of financial overload, so everything should be thoroughly calculated before taking this step
One person stays in the property and pays rent to their ex-partner
- Advantage: any maintenance payments can be offset against the rent
- Disadvantage: Both parties remain liable for ongoing loans – if one becomes insolvent, the remaining debt is claimed from the other
- Please note: if the loan cannot be repaid, foreclosure may again be imminent
Are you unsure about the best solution for your divorce property? Contact us! We will be happy to advise you.
Note
For reasons of better readability, the generic masculine form is used in this text. Female and other gender identities are expressly included insofar as this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific case.
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