If you are like most couples considering divorce, an important consideration is deciding which of you, if any, will remain in the marital home. The decision, as you might expect, factors greatly into the larger process of dividing marital property. While real estate concerns certainly can present a number of complexities, a single piece of residential—and marital—property can be typically addressed in a very straightforward manner with a clear resolution. Other types of real estate, however, are not often so simple, especially those used as investment properties.
What are Investment Properties?
To appreciate how investment properties can impact divorce, it is necessary to understand what they are. An investment property is real estate purchased to generate revenue either on a one-time basis, like flipping a house, or on a long-term basis, such as residential or commercial rentals. As such, the value of an investment property cannot be accurately determined by a simple property appraisal, in most cases. Instead, more complex value calculations must account for future earnings, costs and liabilities, and the projected returns on investment.
There are a number of methods available to provide a reliable value for an investment property. The difference between them lies primarily in the way the property is utilized and what, specifically, the evaluator is looking to establish. Some models, for example, are used for measuring investment risk, while others are more suitable for determining a purchase price. In a divorce situation, however, a combination of both may be necessary to establish not only a property’s value, but also its contribution to an individual’s income and resources.
Allocation of Property and Assets
Once an acceptable value has been determined for all investment properties, assuming they are all part of the marital estate, they must be included in the equitable distribution considerations. Taking into account the statutorily-prescribed factors, the court is responsible for dividing the marital property. The value of investment properties allocated to one spouse must, therefore, be offset by other allocations to the other spouse. For example, a husband may be awarded the couple’s three investment properties, while his wife is allocated the marital home and two vehicles. As stated above, the court will also consider the income expected to be generated by the investment properties when determining spousal support and child support orders.
Real estate in divorce can be very complicated. That is why it is important to rely upon the assistance of an experienced Kane County divorce attorney. Our knowledgeable team understands real estate law and has helped many clients navigate complex divorce proceedings involving investment properties. Contact our office today by calling 630-377-7770 and get the high-quality legal representation you deserve.