Real estate in the event of divorce
When a marriage or partnership ends, the urgent question often arises: what happens to the joint property? A house or condominium is usually the most valuable joint possession – and emotionally charged. In this guide, we show you what options there are for dividing up a divorced property without it becoming a war of the roses.
Shared house – shared responsibility
As long as no solution has been found, both (spouses) retain responsibility for the property in the case of joint ownership – regardless of the divorce. Loan installments, maintenance of the house, insurance, etc. must continue to be paid. Even if one partner moves out, this does not change the ownership structure. This situation can lead to conflicts, as divorced couples are often no longer able or willing to jointly care for the property.
If no agreement is reached, the worst-case scenario is a partition auction (court-ordered forced sale at the request of one of the parties in order to divide the proceeds). This usually brings financial disadvantages, as properties are often sold below market value at auction. It is therefore in the interests of both parties to find an amicable solution. There are essentially three options:
- Sale of the property and division of the proceeds
- Takeover of the property by one partner (against payment of the other)
- Real division or other special solution (e.g. both remain temporary co-owners)
Let’s take a closer look at these options.
Option 1: Sale of the property
If the ex-partners cannot agree on who should keep the house, or if neither can pay the other, selling it is often the most sensible option. The proceeds are initially used to pay off a current loan. What remains is divided according to the ownership shares (often 50/50). One advantage: both parties receive liquidity for a fresh start, and there are no disputes once the property has been sold.
It is important to clarify a few points before the sale:
- Early repayment penalty: If the interest rate on the real estate loan is still fixed, the bank often demands compensation for early repayment. Clarify with the bank how high this would be or whether it is prepared to waive it if, for example, someone takes out a new loan there.
- Taxes: As a rule, the sale of an owner-occupied family home is tax-free. The 10-year period applies to pure investment properties. However, there is usually no sales tax on divorce if it was your own home.
- Property valuation: Have the house professionally valued, ideally by a neutral expert or estate agent, so that both parties can agree on a realistic value. An independent appraisal minimizes disputes about the price.
- Hire a real estate agent: Especially in emotionally charged situations, it makes sense to hire a real estate agent to handle the sale. He or she stands between the parties, arranges viewings and tries to achieve the best price – to the benefit of both ex-partners.
A successful sale dissolves the community of accrued gains with regard to the house and both can go their separate ways – financially cleanly divorced.
Option 2: Transfer to a spouse
Often, one spouse wants to keep the property – e.g. because children are attached to it or they themselves are deeply rooted in it. If both spouses agree on who will take over the house, this option can be chosen.
This is how it works: Partner A takes over Partner B’s share in return for payment of an agreed sum (usually half the value of the house minus any outstanding loans). The whole thing is notarized by a notary. The notary then changes the land register so that only the acquiring partner is registered as the owner.
What to look out for?
- Amount of the compensation payment: The current market value of the property should be taken as a basis here. Half the value is often agreed as the payment. If there are debts, the remaining partner assumes these in full and may pay a lower settlement. Example: House value €400,000, remaining loan €100,000 – net assets €300,000. Payout to ex-partner = €150,000, transferee takes over the loan of €100,000 alone.
- Bank approval: The bank must approve the release of the withdrawing partner from the loan debt. To do this, it checks the creditworthiness of the remaining debtor. This is often only approved if the debtor has sufficient income or provides other collateral. Without the bank’s approval, no transfer of ownership can take place, as otherwise the ex-partner will continue to be liable for the loan.
- Equalization of accrued gains & maintenance: Clarify in advance how the transfer fits into the overall divorce settlement concept. After all, if one partner receives a large sum, their assets will increase in the final asset settlement, which will affect the equalization of gains. The same applies to the transferee: although they have debts, they also have the house and are now saving on rent – this could theoretically affect their maintenance obligation. It is therefore recommended that maintenance and equalization of assets be clarified first and then the property transferred in order to avoid double disadvantages.
- Additional costs: No land transfer tax is payable on transfers between spouses in the course of divorce. However, notary fees and land registry costs must be paid. These are based on the transaction value (usually half the value of the property). As a rule, however, this is manageable compared to the value of the property.
If everything is properly settled, one of the ex-partners has the house alone and the other the corresponding money – the property is thus taken out of the divorce settlement.
Option 3: Real division or special solutions
Real division means physically dividing the property so that two separate units are created, each owned by one partner. Example: In a two-family house, each partner could have sole ownership of an apartment (by declaration of division and entry in the land register). To do this, the property must be structurally separable (separate entrances, separate apartments).
Advantages and disadvantages: Everyone has their own property afterwards and can do what they want with it (sell, rent, live in themselves). However, the conversion to a second unit sometimes requires high investments and you remain neighbors – that has to fit emotionally. In addition, the authorities and possibly other owners (in the case of a condominium) must agree.
Another special solution is that the ex-partners decide to keep the property together for the time being (e.g. until the children are of age) and sell it later. In this case, it is often agreed that one of them will remain living in the property for the time being and will bear the running costs, for example, but will not pay any usage fee. Such agreements should be recorded in writing (ideally by a notary) so that no new conflicts arise.
Equalization of gains: Who gets what from the house value?
In legal terms, the division of assets in the event of a divorce is based on the equalization of accrued gains (unless separation of property has been agreed). Briefly explained: Each spouse generally retains their own assets. The equalization of accrued gains looks at how much each spouse has gained during the marriage (final assets minus initial assets). The spouse with the higher gain must pay half of the difference to the other spouse.
In practice, this means for the property:
- Joint house (bought 50/50): Here, both usually have the same increase in assets, as the house belongs to both of them. In principle, the house would simply be sold on divorce and divided between the two of you, or one of you would take it over (see options above). There is no additional equalization of gains for the house here, as it belongs to both of them and both of them have an equal share in the final assets.
- House belongs to only one spouse (sole ownership, acquired before the marriage): In this case, the house remains with the spouse, but increases in value during the marriage are taken into account in the gain. Example: Wife already owned the house before the marriage, worth €200,000 at the time. On divorce, the house is worth €350,000. The wife’s gain from the house is €150,000 – the husband is entitled to half of this as compensation.
- House bought during the marriage (in one name): If the property was purchased during the marriage and only one partner is listed in the land register, then the entire value counts as gain in this partner’s final assets, as initial assets = 0 (as far as the house is concerned). Example: Husband bought a house in his name during the marriage, value €300,000. Still worth €300,000 on divorce (no gain, but €300k gain, because 0 at the beginning). The wife would be entitled to €150,000 in equalization of gains.
- House inherited or gifted during the marriage: Inheritances and gifts do not count as gains, but the further increase in value of the inheritance during the marriage does. Example: Husband inherits a house in 2015 (worth €250,000). On divorce in 2025, the house is worth €400,000. The gain is €150,000, of which €75,000 goes to the wife. The inheritance itself remains initial assets, but the increase in value is gain. If, on the other hand, the house had been gifted/transferred by the father-in-law during the marriage, the same applies – initial value counts as initial assets (if treated as a privileged gift) and only the increase in value is divided.
These examples show: One partner may often have to pay out to the other, even if the other was not even in the land register. Therefore, equalization of accrued gains and the real estate solution should be considered together. In many agreements on the consequences of divorce, it is agreed that the transfer/sale of the property also settles the equalization of gains in order to create clear conditions.
Last resort: Partition auction
If all else fails – no agreement on sale or takeover – the only legal remedy is a partition auction (§ 749 BGB, § 180 ZVG). Any co-owner can apply to the local court for this in order to dissolve the community by force. The property is auctioned off in the same way as in a foreclosure, but at the joint request (or the request of one of the parties).
Why avoid it? Auctions often generate lower proceeds than the open market. In addition, court costs are incurred and the proceedings can take a long time. The pressure of a requested partition auction is often used to reach an out-of-court settlement after all – because both parties realize that they will otherwise lose out financially.
Sometimes a partner tries to use a partition auction as leverage or even to buy the property themselves at a lower price. But this can backfire: There is no guarantee of winning the bid and additional costs are incurred. Courts may order a postponement on application if an auction would be “palpably grossly unfair”, but ultimately you cannot permanently prevent a partition auction if someone insists on it.
Therefore: Try to find an amicable solution (sale, takeover) in the interests of both parties. Consult mediators or lawyers before it gets that far.
Conclusion: In the event of a divorce, there are various solutions for the joint property. Each has legal and financial consequences. The most important thing is to remain objective and seek expert advice. With a notary, lawyer and possibly an estate agent at your side, fair agreements can be reached that are fair to both ex-partners – without unnecessary loss of value. This way, what was once a shared home will not become an endless dispute.
Are you facing a separation and don’t know what to do with your property? We can help you neutrally and professionally. From valuations and sales to advice on takeovers – contact us for confidential advice on all aspects of divorce property.
FAQ – Frequently asked questions about taxes & finances for owners
Yes, this is possible if both parties are in agreement and the financial conditions are right. As a rule, the person who wants to take over the house alone must pay off the ex-partner. In addition, the bank must agree that the person taking over the house will service the loan alone in future – in other words, they must have sufficient income/capital to cover the financing.
The equalization of accrued gains compensates for the increase in assets during the marriage, provided you were in the community of accrued gains regime. In terms of real estate, this means that if one spouse has made a capital gain from the property, they must give half of it to the other. In the case of a jointly purchased house, both have the same gain. The equalization of gains comes into play in particular if a property is solely owned or becomes solely owned during the marriage.
If both partners have signed the loan agreement, they are jointly liable – even if they separate. The bank must agree to a release from the debt, otherwise the liability remains. If the property is sold, the loan is repaid first and the rest is divided up. Important: Talk to the bank at an early stage and make clear arrangements in the divorce agreement to avoid payment defaults.
A partition auction is used to sell joint property by force if no agreement can be reached – for example in the event of separation or an inheritance dispute. The proceeds are divided up, but are usually lower than in a private sale. It is often only a means of exerting pressure and should only be used as a last resort, as both sides lose out financially.
Ex-partners can remain co-owners even after the divorce, for example for the sake of the children. This requires clear agreements on costs, use and decisions. It is often only a temporary solution. If one partner stays in the house, the other may be entitled to compensation for use. Permanent co-ownership is rare and harbors potential for conflict – clear relationships are usually better.
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