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What divorcing people need to know about real estate

In many divorces, one of the biggest decisions people need to make is what they are going to do with the marital home. A house is often a family's largest asset, but it is not as easy to divide in a property settlement as money in the bank. Real estate has unique features that those going through divorce should be aware of when making decisions about dividing marital property.

Get an appraisal

One of the most important things a person going through a divorce needs to do when considering what to do with the marital home is to get a professional appraisal of the property. A professional appraisal will help determine the fair market value of the home. Property values can rise and fall rapidly, so even if a person had a home appraised within the past few years an updated appraisal may reveal that the value has changed.

Some people may believe that the value that the government assesses their homes for the purposed of property taxes is the same thing as an appraisal, so they do not have to hire a professional to appraise their homes. However, real estate appraisers look at sales of other homes in the surrounding area, as well as any unique property features, to determine what the fair market value of the home is.

People going through divorce may think that if their spouses have hired an appraiser, they do not need to do so as well. However, some spouses may want the property appraised in a particular way that would benefit them, so it may be important to have more than one person value the property if both spouses have not agreed on a neutral appraiser.

Retrospective valuations

In some cases people may want to have an appraiser determine what a house's value was in the past. For example, when one spouse moved into a home the other spouse owned prior to the marriage, only the appreciation of the house is marital property - not the entire value of the house - so spouses need to know what the value of the home was at the time of the marriage and the current value. Retrospective valuations also help show that a property lost value, which could be important to take into account in property division.

Equity in real estate

When deciding what to do with a house, those going through divorce need to be aware that the equity they have in their homes is not the same as having money in a bank account. Real estate is not a liquid asset, so if one spouse decides to keep the home that spouse should be sure that he or she has other liquid assets to use in case of an emergency.

Additionally, the equity in the house is not what the spouses will receive if they sell the home. Selling a home involves costs, which in some cases can be substantial. Also, if people sell their homes for more than they paid for them, they may end up owing capital gains taxes on the profits.

Speak with an attorney

Deciding what to do with the marital home is just one of the many complicated aspects of negotiating a divorce property settlement. People should not try to handle such matters without the assistance of professionals. If you are considering divorce, talk to an accomplished divorce attorney who can help ensure that you receive an equitable property settlement.

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