Checklist: Real estate during the divorce

Divorce is often an emotional rollercoaster ride. It is also a bureaucratic effort. Even if the joint property is always at the back of their minds, many couples find it difficult to find a good solution. To make it easier for you to keep track of the divorce property, you can find our checklist here.

There are usually four ways to deal with the joint property in the divorce. It can be sold or rented out. One of the former partners can take it over and pay off the other or pay rent to them.

Selling a property

• Advantage: makes sense if debts have to be repaid, for example if the real estate financing has not yet been paid off
• Disadvantage: if the loan is repaid before the fixed interest rate expires, many banks charge a prepayment penalty
• Important: speculation tax may apply if the property was lived in for less than ten years before the sale
• Caution: if the two parties cannot reach an agreement, there is a risk of foreclosure - this often has a negative impact on the sale proceeds

Rent a property

• Advantage: makes sense if the property is to remain in family ownership
• Disadvantage: as a landlord, you have to take care of managing the property, which can lead to disputes between divorcing couples
• Important: managing a property often only works if the divorcing couple is still on good terms and responsibilities can be divided up
• Please note: if the real estate loan has not yet been paid off, the rental income should be sufficient to cover the monthly installments

One of the ex-partners takes over the property

• Important: whoever takes over the property must be able to bear all the costs - the other partner must be paid out, if the loan has not yet been paid off, these costs must also be borne, as well as housing and maintenance costs
• Caution: there is often a risk of financial overload; everything should be thoroughly calculated before taking this step

One stays in the property and pays rent to the ex-partner

• Advantage: possible maintenance payments can be offset against the rent
• Disadvantage: both are still liable for current loans - if one becomes insolvent, the remaining debt is claimed from the other
• Caution: if the loan cannot be paid off, there is again the threat of foreclosure

Are you unsure what the best solution is for your divorce property? Get in touch with us! We will be happy to advise you.

Note

For reasons of better readability, the generic masculine is used in this text. Female and other gender identities are explicitly included where 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 individual case.

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