Dividing one household into two during a divorce is challenging and stressful, but when you add complex assets such as rental properties into the equations it can become even more complicated. It helps to have the legal expertise of experienced Denver divorce attorneys like the team at Denver’s Ciancio Ciancio Brown P.C. on your side to help explain the division of assets such as rental properties during a divorce.
What are Marital Assets Under Colorado Law?
In Colorado, the term marital assets can cover anything acquired by a couple during their marriage, whether they bought it or received it as a gift. It does not include the following:
- Assets acquired by one spouse before the marriage
- An inheritance gained by one spouse
- Property excluded from becoming joint assets by a pre-nuptial legal agreement
- Property one spouse acquires after becoming legally separated
Under these exclusions, the spouse alone retains the property exclusively. These exclusions pertain to any rental properties that meet the above criteria and a spouse would have no claim on the properties. However, if the property increased in value during the marriage, the amount of the increase is joint property. While the spouse who owns the property can’t be ordered to sell it, they may have to pay their spouse the difference.
How is Rental Property Divided In Colorado?
If a couple acquires rental properties during their marriage, it’s considered a joint asset of the marriage, even if the title includes only one spouse’s name. Because all joint assets belong to both spouses, they must be divided equitably. There are 3 common options for dealing with a rental property during a divorce:
- The couple can sell the property and divide the profit equally
- If one spouse wants to retain the property, the other spouse can ask for another marital asset of equal value
- Instead of selling the property, the couple can continue to own and manage the property together after the divorce with a property management agreement. This option cannot be mandated by the court, but a couple can choose it on their own if they think they can manage the property together peacefully
Colorado law doesn’t require a couple to use one of the above common methods of dividing property. A couple can decide on other ways of dividing the property as long as the court considers it an equitable division. It’s best for the divorcing couple to choose their preferred way to handle the division of rental property on their own rather than the court deciding during the final divorce hearing. A court may demand the couple sell the property or could award the property to one spouse.
Selling Rental Property During a Divorce
Once both parties or a court agree that a property is a joint marital asset and the couple decides to sell the property, a full appraisal to determine the property’s value is the first step. In some cases, they may also need historical appraisals in order to discover any increase in value during the time of the marriage, which is an amount considered joint property.
If you and your spouse are divorcing and own rental property either separately or jointly, it’s best to speak to an attorney with years of experience in property division and the applicable tax implications during a divorce. The lawyers at Ciancio, Ciancio, Brown P.C. in Denver are highly skilled in untangling the complexities of dividing marital assets including rental properties.