Savvy investors often buy one or more real estate properties. They rent the properties to tenants and receive rental income. While rental properties are a great way to earn passive income, addressing real estate property during a divorce is often complex. Many landlords are unsure of how rental properties will be dealt with during their divorce. If you or your spouse own one or more rental homes, speak to a divorce lawyer for help.
Real Estate Property Ownership Rights
There are two main types of assets in an Illinois divorce. Marital assets are those assets acquired during the marriage. Separate assets are assets that a person owned before getting married, property acquired through inheritance, and property acquired through gift. If an asset is considered marital property, both spouses have a right to a share of the asset’s value. If an asset is non-marital, it belongs solely to the spouse who originally obtained the asset.
Unfortunately, classifying property as marital or non-marital is not always as straightforward as it may seem. For example, a rental property that a spouse owned prior to getting married may become marital property if both spouses contribute to property taxes and maintenance costs.
Dividing the Value of Marital Property in a Divorce
If rental properties are considered marital assets, both spouses have the right to a share of the home’s value. Before divorcing spouses can properly address rental properties, they will need to get the property professionally valued.
Spouses who co-own rental property or vacation homes have a few different options during divorce. Some choose to sell the property, pay off joint debts, and divide any leftover profits. Other couples decide that one spouse will become the sole owner of the rental properties and the other spouse will be reimbursed for his or her share with other marital assets. It is also possible for divorcing parties to remain in business together after their divorce. For example, the spouses could create an LLC in which they are each 50 percent owners.
Income from rental properties counts as income for the purposes of child support and spousal maintenance calculations. It is important for spouses to consider how rental property ownership will influence these issues as well.
Contact a DuPage County Asset Division Lawyer
If you or your spouse own rental properties and you plan to divorce, contact Davi Law Group for help. Our Wheaton divorce attorneys know the financial and legal implications of rental property ownership during divorce. We can help you evaluate your options and choose the option that is best for you and your family. Call 630-657-5052 for a free consultation.