Equalization of accrued gains - what you need to pay attention to during divorce
4 min.
When couples get divorced, the question of "Who gets what?" is of essential importance. Especially when it comes to a jointly owned property that now has to be divided, the battle is often a tough one. With the equalization of accrued gains, the legislator has tried to create a fair solution for the separation of property after a divorce. Unfortunately, in practice, the regulations are usually anything but easy to implement.
Most marriages in Germany are concluded without a prenuptial agreement. Many see a prenuptial agreement as an unnecessary bureaucratic act and consider it a bad sign if divorce is discussed before the wedding. Without a marriage contract, the marriage is always considered to be a so-called community of accrued gains. This legal definition means that in the event of a divorce, each partner is not only entitled to half of the joint assets, but also to an equalization of gains - i.e. a 50% share of the amount by which their spouse's assets have grown during the years of the marriage. The equalization of accrued gains often causes particular difficulties when it comes to the division of a property. There are at least three significantly different cases.
Case 1: The property belongs to both spouses in equal shares
If both spouses are registered as owners in the land register and the property is their joint property, there is no equalization of gains. The property is therefore simply - and this is often difficult enough - divided equally between the two spouses. If one of the partners wishes to remain living in the property, he or she must pay the other half of the value in the form of money; in the event of a sale, both receive half of the proceeds from the sale.
Case 2: One of the spouses is the sole owner and brought the property into the marriage
If one of the spouses is the sole owner and has already bought or inherited the property before the marriage, it generally remains their sole property even after the divorce. However, any increase in the value of the property during the years of the marriage constitutes a (capital) gain, which means that the divorced spouse must be paid an equalization of gains. An example: At the time of the marriage, the value of the property was 300,000 euros. 25 years later, there is a divorce and the value has risen to 500,000 euros. Due to the gain of 200,000 euros, the owner of the property must pay his divorced spouse an equalization of gains of 100,000 euros.
Case 3: One of the spouses is the sole owner and acquired the property during the marriage
The situation is completely different if the property was only acquired or inherited by one of the spouses after the marriage. The entire value of the property is then to be regarded as a gain in assets during the marriage. For example, if one spouse inherited a property that was worth 300,000 euros at the time of the inheritance and is now worth 500,000 euros, their assets have increased by the total amount of 500,000 euros - all within the duration of their marriage. In the event of a divorce, the other partner is now entitled to an equalization of gains of 250,000 euros - half of the total value of the property, even though he or she is not a co-owner.
In practice, the situation is often even more complicated if loans have not yet been paid off or the property is encumbered with a mortgage. The desire of one of the partners to stay in the property after the divorce often fails because they cannot pay off their divorced ex-partner. The equalization of accrued gains ensures that even sole owners often find themselves in this situation. The only way out is to sell the property.
Not sure whether selling your home after separation is the best solution for you? We will be happy to advise you on your options.
Didn't find what you were looking for here? Then read here:
https://de.wikipedia.org/wiki/Zugewinn
https://de.wikipedia.org/wiki/Ehevertrag
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.
Photo: © mitay20/Depositphotos.com
Rate your property now!
Free of charge | Non-binding
SAWALL REAL ESTATE
Kleinmachnow office
SAWALL REAL ESTATE
Berlin office