When a marriage ends, one of the most significant concerns is how to divide assets, including investment real estate.
Understanding how Texas divides investment properties can help you navigate this challenging aspect of divorce proceedings.
Community property laws
Texas follows community property laws. Assets purchased during the marriage are subject to division upon divorce. It does not matter who holds title to the properties.
The court divides assets based on what is “just and right.” This principle means that the division of property must be fair and equitable. It does not necessarily mean an equal split.
When a spouse acquires real estate before the marriage or receives it as a gift or through an inheritance, it is generally considered separate property. This kind of asset may not be subject to division.
Rental and investment properties
Texas treats investment property similarly to other real estate holdings. The court considers the associated debts, mortgage balances and other factors. This process helps ensure a fair asset distribution and debt allocation balance between parties.
Reimbursement claims
Sometimes, one marital estate spends money or contributes other property for the benefit of another estate. In these instances, reimbursement claims can arise for various reasons, including:
- Payment to another marital estate
- Inadequate compensation for time and effort
- Reduction of principal on debt
- Capital improvements to the property
These claims can ensure fairness when dividing property.
Division methods
You can divide your investment real estate by selling the property and splitting the profits. Another option is to trade the property for a marital asset of equal value. If you feel you can continue working with your spouse, you can keep joint ownership. If a business entity owns the investment property, the court can only divide the business interests. It can not divide the businesses’ owned assets.
Navigating the division of investment real estate in a Texas divorce can be complex. However, when you understand the state’s community property laws and principles of equitable distribution, you can secure a fair settlement.
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