Checklist for selling property during or after a divorce
Divorce is incredibly challenging, and not just emotionally. A lot of decisions need to be made, including what to do with any jointly held property. How do you split a property? What problems can you expect to encounter? Our checklist provides an overview of the key aspects involved in the process.
You generally have the following options regarding your property when you divorce: a) you sell the property; b) you maintain joint ownership of the property; c) you or your partner purchase the other share of the property; or d) you transfer property ownership to one or more children, either as a gift or as a form of advance inheritance. Bear in mind that each of these options comes with at least one catch.
Selling the property
- To pay off any debt taken out to finance the property, selling is often the best solution.
- One minor drawback: If a loan is repaid before the fixed interest rate expires, the bank will charge you an early repayment penalty. If a couple have lived in the property for less than 10 years before selling, a tax on speculative gains may apply.
- Warning: If both partners cannot agree on the sale, you may be faced with the threat of compulsory partition by public auction, which usually negatively impacts the proceeds from the sale.
Letting out the property
- Letting out the property is a sensible option if you want it to remain in the family.
- One minor drawback: When you let out your property, you will still be responsible for maintenance, repairs and the administrative work involved, which can cost a lot of time and money.
- Warning: Letting out your property is usually only worthwhile if the rental income can cover the repayments for any loans taken out on the property, and if both partners agree on how responsibility for the property will be split.
Remaining in the home
- The partner remaining in the property pays rent to the other partner, or rent is offset against any spousal maintenance payment owed.
- One minor drawback: When you let out your property, you will still be responsible for maintenance, repairs and the administrative work involved, which can cost a lot of time and money.
- Warning: Letting out your property is usually only worthwhile if the rental income can cover the repayments for any loans taken out on the property, and if both partners agree on how responsibility for the property will be split.
- Downside: The partner who takes full ownership of the property must buy out the other partner’s share of the property while also bearing the costs of housing and maintenance. That partner will also then be solely responsible for repaying any loans on the property.
- Warning: This often leads to overburdened finances.
Still not sure what the best solution is for your situation? Get in touch with us! We are happy to advise you.
https://www.rosepartner.de/familienrecht/immobilien-bei-trennung-und-scheidung.html
https://rechtsanwaelte-rf.de/ratgeber-familienrecht/immobilie-bei-scheidung/
https://www.steuerberater-pressler.de/steuerliche-auswirkungen-bei-scheidung/
Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.
