Frequently Asked Questions

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Dividing assets as a result of a divorce is often one of the most challenging aspects of the process, especially regarding real estate. Dealing with real estate, whether it be the Primary Marital House, a Vacation Property or an Investment Property, can be complicated with various legal, tax and financial factors to consider. In Florida, equitable distribution laws and other legal considerations need to be well understood.

How is real estate divided in a Florida divorce case?

Florida is an “equitable distribution” state, meaning the court will divide marital property, including real estate, in a manner deemed “fair”. Although it may be most common for the court to equally divide the marital assets, there are rare occasions when a court may provide for an unequal division of the marital assets after considering factors such as: the economic circumstances of each spouse, what contributions they made to the marriage (including sacrifices that they made for the other spouse), how long they were married, whether either spouse wasted assets after the divorce action was filed, and how selling the marital home would impact children of the marriage.

What is the importance of real estate valuation?

Proper valuation forms the bedrock of asset division. Real estate should be accurately valued to ensure fair division. The involvement of specialist real estate advisors is often indispensable in divorces for their meticulous assessment of the value of the marital and separate assets. In a high-net-worth divorce, there might be numerous real estate holdings, rental properties, or vacation homes. Each of these necessitates a different approach to valuation, considering their current market value, potential future appreciation, and the income they generate.

What qualifies as marital assets or marital property?

Real estate acquired during the marriage is typically considered marital property, regardless of whose name is actually on the title. Property owned by one spouse before the marriage or acquired through inheritance or a gift may be considered non-marital property, unless it has been retitled in the spouses’ joint names as husband and wife (such as “tenancy by the entireties”) , or commingled with other marital assets. Also, generally the paydown of a mortgage on (initially) nonmarital real estate with marital funds is considered a marital asset in Florida.

Is my real estate non-marital?

There are several situations where property or related debt may deemed to be separate and not part of the marital estate. These include but are not limited to:

· Real estate owned by one spouse before the marriage

· Property held separately prior to the marriage that has increased in value

· Property included in a prenuptial or postnuptial agreement

· Inheritance or interests in a trust or family limited partnership

· Personal injury damage awards or settlements

· Gifts or bequests

· Assets commingled during a period of cohabitation before the marriage

· Mortgage debt paid during the marriage on one spouse’s premarital obligations, such as student loans or tax obligations

How are investment properties or vacation homes treated?

Investment properties or vacation homes are generally treated similarly to the marital home. Their classification as marital or non-marital property and their division depend on when and how they were acquired and whether marital funds were used for maintenance, mortgage payments or further capital improvements.

Documentary stamp taxes can result in additional costs incurred by the parties in connection with the divorce.

How are homestead exemptions addressed in a divorce?

Florida’s homestead exemption can complicate divorce proceedings. If one spouse remains in the marital home, they may continue to benefit from the exemption. However, any transfer of ownership or changes in residency status can impact the exemption’s applicability.

What happens if both parties wish to keep the house?

If both spouses wish to retain the marital house, the court may evaluate their ability to maintain the property, including financial resources and the best interests of any children. In many cases, one spouse buys out the other’s share of the equity at fair market value. The spouses would need to agree on the value of the home, and they would seek to obtain a professional valuation of the real estate.

What if neither party wishes to keep the house?

If neither spouse wants to keep the marital home, the usual route is to sell the property and divide the Net Equity equitably. This involves figuring out the home’s current market value and taking into account any outstanding mortgages, liens or other encumbrances that may be attached to it. The spouses would need to seek a professional to establish the nature and amount of these encumbrances.

How are mortgages handled in a divorce?

If one spouse keeps the marital house, and the other spouse transfers the property out of their name, then the couple’s mortgage company will most likely require that the spouse retaining the property refinance the mortgage in their name to remove the other spouse from liability. Until this is done, both spouses remain legally responsible for the mortgage payments, regardless of whose name is on the title.

What if there is a prenuptial or postnuptial agreement?

Prenuptial and postnuptial agreements can significantly impact how real estate is divided. If the agreement specifies how property should be handled in the event of a divorce, Florida courts typically honor those terms, provided the agreement is legally valid and enforceable.

Are there tax implications for dividing real estate?

Selling real estate or transferring ownership during a divorce can trigger tax consequences, such as capital gains taxes or property tax reassessments. It is important to understand these implications.

Also, investment properties or vacation homes are typically subject to documentary stamp taxes based on the amount of consideration exchanged for the property. Consideration includes anything of value given or exchanged for a piece of real property, for instance if a vacation property is encumbered by a mortgage, then the transfer is taxable based on the current principal balance of the mortgage relative to the interest transferred.