How is Commercial Real Estate Divided in a Divorce?

 Posted on September 13, 2022 in Property Division

Couples with a high net worth often have a broad portfolio of assets they use to diversify their investments and ensure their risk is spread out across both high-risk and low-risk areas. Rented real estate presents a prime opportunity for couples who can afford the down payments to have an asset that is all but guaranteed to increase in value while also providing rental income. 

Jointly owned investment properties are considered part of the marital estate and must be divided in an Illinois divorce. A couple may strongly disagree about how they want to manage both the value and the liability of an investment property, which can present significant challenges. 

How Much Is the Rental Property Worth? 

Before an asset of any kind can be divided in a divorce, its value must be assessed. Sometimes spouses prefer to sell an investment property and split the proceeds. In these cases, a property will simply be put on the market, and, once a suitable buyer is found, a couple will decide how to split the proceeds from the property’s sale minus whatever money a couple still owes on the mortgage. 

Other times, however, one spouse will want to continue managing the property. In this case, a couple will need to hire a real estate appraiser who can assess the value of the property. If there is any question about whether an appraiser is competent, accurate, or perhaps is not being entirely truthful, each spouse may want to hire their own appraiser. 

Once spouses agree on the value of the property, they will need to decide how the spouse who wishes to keep the property will buy out its value from the other spouse. This can be done by trading other assets, such as ownership of the marital home or an investment portfolio, or by simply making a cash payment. It is important for the spouse who wishes to keep the investment property to consider whether he can keep up with the cost and maintenance of the property by himself. 

If an investment property is being rented and there is rental income, the spouse who decides to keep the property will need to include the rental income as part of his overall income for the purposes of child support and spousal support payments. Assessing a rental property’s income is a complex endeavor that requires the help of accountants who can keep track of a property’s expenses, taxes, mortgage payments, and more. 

Call a Wheaton, IL High-Asset Divorce Lawyer

Managing the division of complex, high-value assets like real estate requires the help of an experienced team of DuPage County divorce attorneys. At The Stogsdill Law Firm, P.C., we have helped many couples divide large investment portfolios and give each case the attention to detail it deserves. Make sure you get a fair asset division in your divorce by calling us today at 630-462-9500 and scheduling your initial consultation. 

Source: 

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000