When you and your spouse divorce in California, you must find a way to divide all your properties equally, or else the court does it for you. Real estate can be tricky to split, and your vacation home may come with even more challenges.
Is it marital or separate property?
If you owned the home before you married, it may belong solely to you, and your divorce will not affect it at all. However, if you have a mortgage on the property, and those payments came from money that you or your spouse earned during your marriage, then you will have to divide at least some of the equity in the home. A home that you or your spouse purchased while married is marital property, unless one of you used separate property to make the purchase and did not use any marital funds to make changes to the house or commingle the asset in any other way.
How much is it worth?
The value of your vacation home that is relevant to property division in the divorce is not the same as the value assessed locally for tax purposes. Instead, you must find the fair market value, and according to Forbes magazine, the only way to determine this is to hire a real estate appraiser who knows the market where the property is located. He or she will compare your house to others like it in the immediate area that have sold recently to help determine its value. Unique features may add to or detract from the fair market value, so a professional should factor these in the calculation, as well.
How much equity do you have in the home?
The formula for determining the amount of equity that you and your spouse will be dividing can be complex. Influences include the fair market value, the amount you originally paid, the amount of any mortgages on the property and how much you would owe in taxes if you sold it, among other potential issues. An experienced attorney can work with the appraiser and other professionals to make sure you do not lose any property that is rightfully yours in the divorce.