Real Estate Issues in Divorce —
Protecting Your Home and Your Future

In California, the family home is community property if it was purchased during the marriage — meaning both spouses have an equal ownership interest. Divorcing spouses generally have three options: sell the home and split the proceeds, one spouse buys out the other’s equity and keeps the home, or the home is rented with rental income shared. When children are involved, courts may also order the home to remain occupied by the custodial parent until children graduate from high school — after which the home is sold and profits split. At Haslam Perri Law Firm, our attorneys explore every option and negotiate the arrangement that best serves your interests.

The equity in the family home is calculated by determining the current fair market value of the property and subtracting the outstanding mortgage balance. A professional real estate appraisal is typically required to establish fair market value. If the spouses cannot agree on value, each may hire a separate appraiser — with a neutral third appraiser resolving any significant discrepancy. The community property interest is then the net equity divided by two. Our attorneys ensure valuations are accurate and that all equity — including any separate property contribution — is properly credited.

Several options are available. You may be able to refinance the mortgage in your own name and use the new loan to pay your spouse their share of equity. If refinancing is not immediately possible, our attorneys have successfully negotiated arrangements where the buyout is paid over time — either through structured payments or by offsetting other marital assets against the home equity. We have also negotiated agreements allowing one spouse and the children to remain in the home until the youngest child graduates high school, after which the home is sold.

Investment and rental properties acquired during the marriage are community property subject to equal division. Options include selling the property and splitting proceeds, one spouse buying out the other, or — if both parties agree — continuing to co-own and rent the property after divorce. Each option has different tax, income, and logistical implications. Our attorneys evaluate the rental income, mortgage balance, depreciation, and capital gains tax exposure to identify the most financially advantageous solution for each property.

If both spouses cannot agree on what to do with the family home, a California court can order the property sold — a process known as a partition. However, courts consider the best interests of any children living in the home before ordering a sale. Judges may delay the sale to allow the custodial parent and children to remain in the home for a period of time. Our attorneys negotiate to protect your right to remain in the home — and when that is not possible, we ensure you receive your full fair share from the sale.

If you sell the family home before divorce, you and your spouse may each exclude up to $250,000 in capital gains — for a total exclusion of $500,000 as a married couple. After divorce, each individual can exclude only $250,000. If the home has significant appreciation, selling before the divorce is finalized may be more tax-efficient. If you keep the home and sell it later, you may lose half of the capital gains exclusion. Our attorneys analyze the tax implications of every option before advising on the best path forward.