Determining what to do with your family home as you divorce can be a challenge. However, even if you’ve gotten that sorted out, what if you have a rental property as well? That can be even more complicated.
Whether you’re renting out your starter condo or home or a property you bought solely for the purpose of some rental income, it can be a lucrative asset that neither of you wants to part with. Assuming that it’s determined to be a marital asset, you’ll need to reach some kind of agreement regarding what to do with it. If you have long-term tenants, they’ll need to know as well.
You’ll need to have a clear, detailed agreement
If you both want to keep the rental property, you’ll need to be able to work together unless you hire a property management company. If you have more than one rental property, that could be a cost-effective solution.
Either way, you’ll need an agreement stipulating how you’ll divide expenses and profits. If the two of you are going to continue to manage one or more rental properties on your own, you’ll want to work out who will be responsible for repairs, upgrades, collections and other aspects of being landlords.
Determining what to do with rental properties in divorce can be in some ways like determining what will happen to a shared business. Of course, real estate has its own unique considerations.
If your spouse feels strongly about keeping the property but you question whether you can work together, you might be able to negotiate a lucrative sale of your share to them. As you decide what’s in your best interests, it may be wise to add real estate, tax and financial professionals to your divorce legal team.