How can you divide rental properties in a collaborative divorce?
Divorce can become more complicated when you and your spouse own rental properties together. These investments may provide steady income or represent years of financial planning, making decisions about their future difficult. A collaborative divorce gives you an opportunity to work through your options together and reach an agreement that reflects your financial circumstances.
Here are three ways you can approach dividing your rental properties.
Selling the properties
Selling your rental properties allows you to divide the proceeds rather than maintain shared ownership. You and your spouse can agree to sell the properties and split the remaining proceeds after paying off mortgages and selling costs. You should also account for potential taxes on the sale, since capital gains could affect how much each of you ultimately receives.
Under Ohio Revised Code Section 3105.171, the division of marital property takes into account the circumstances of the marriage and other relevant factors. Discussing these costs and obligations during collaborative divorce can help you reach an agreement on how to divide the proceeds.
Buying out your spouse’s share
You can keep a rental property by paying your spouse for their ownership interest. First, you will need to agree on the property’s value and determine how much equity each of you holds. You should also consider whether you can afford the mortgage, repairs and other ongoing costs on your own. If you need to refinance a joint mortgage, check whether you qualify before finalizing your agreement.
Keeping joint ownership
You and your spouse can continue owning rental properties together after divorce if you agree on how to manage them. This option allows you to retain the properties and their rental income, but you will need a plan for handling maintenance, expenses, vacancies and future decisions. Your agreement should also explain how either of you can sell your interest or end the shared arrangement later.
Create a plan that protects your interests
Selling, buying out your spouse or retaining joint ownership each comes with different financial consequences. During a collaborative divorce, you can work through these options together and decide which arrangement best fits your needs. An attorney can help you review property records, assess your options and document an agreement that protects your interests.
