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What Happens to Real Estate in a Florida Divorce?
By: Dividing property during a divorce is often one of the most challenging aspects for couples, particularly with regard to real estate. In Florida, equitable distribution laws and other legal considerations come into play.
With the help of my colleague, real estate attorney Alessandro Secino, we share guidance to frequently asked questions to help couples understand the process and potential issues that may arise when dealing with real estate during a divorce.
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 is most common for the court to equally split 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 each spouse’s contribution to the marriage, the duration of the marriage, and each party’s economic circumstances.
What qualifies as marital property?
Real estate acquired during the marriage is typically considered marital property, regardless of whose name is 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, or commingled with marital assets. Also, the paydown of a mortgage on nonmarital real estate with marital funds is considered a marital asset in Florida.
What happens if both spouses want to keep the house?
If both spouses wish to retain the marital home, 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. If the spouses cannot agree on the value of the home, then they may need to obtain a professional appraisal of the real estate.
What if neither spouse wants to keep the house?
If neither partner wants to keep the marital home, the usual route is to sell the property and split the profits fairly. This involves figuring out the home’s current market value and taking into account any outstanding mortgages or liens that may be attached to it.
How are mortgages handled in a divorce?
If one spouse keeps the marital home, and the other spouse transfers the property out of their name, then the couple’s mortgage company will 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 deed.
What about investment properties or vacation homes?
Investment properties or vacation homes are 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 upkeep or improvements.
Unlike with the marital home or a couple’s homestead property, 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. Documentary stamp taxes can result in additional costs incurred by the parties in connection with the divorce.
How does Florida law address homestead exemptions in 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 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?
Yes, selling real estate or transferring ownership during a divorce can trigger tax consequences, such as capital gains taxes or property tax reassessments.
Bottom Line
When going through a divorce in Florida, splitting real estate can be complicated with various legal and financial factors to consider. It is important couples understand the concepts of equitable distribution as well as how mortgages and tax implications come into play, to make the process smoother.
If you have any questions or need help, feel free to reach out to me at 239-344-1119 or iman.zekri@henlaw.com to set up a consultation.