Splitting Your Investment Property During A Divorce
January 5, 2018
Reaching a decision to end a marriage or a de facto relationship is an extremely emotional experience for most people.
Navigating all the logistics of the separation can be exhausting and overwhelming, and separating couples can find it extremely difficult to forge a way forward in both matters of the heart and the head.
Most married or de facto couples acquire assets (and liabilities) during their relationship and conflict can often arise when it comes to dividing these up in the event of a separation. This ‘property and finance’ may include real estate (such as the family home and investment properties), motor vehicles, furniture, interests in businesses, shares, superannuation and money in banks or other financial institutions.
Many factors need to be considered when deciding how property is going to be divided, especially when children are involved who require financial support. Importantly, if you are going through a separation, both parties must tell one another about all the property and finances.
This article outlines some of the issues involved when an investment property is split during separation, but it is only intended as a guide and couples should always seek advice from an experienced family law practitioner.
Laws on property in the event of a divorce
When a couple splits up, it’s important to discuss how the property or properties will be divided and how the finances will be sorted out. There are laws about property settlement when a relationship breaks down (Family Law Act 1975) and if you are unable to reach an agreement, you will need to make an application to the Family Court.
Help with reaching an agreement
As far as possible, people should try and resolve disputes and reach an agreement about their property arrangements without going to court. If you and your former partner agree on how you are going to split your property and assets, you can draw up a property agreement. This document sets out how the property/properties will be divided, you should contact a Family Lawyer to draft this document, as it is a binding and legally enforceable contact.
Mediation services can also assist separating couples to negotiate a property agreement. An experienced divorce lawyer (who is required to be independent from any lawyer who is giving your ex-partner legal advice) and who is experienced in family property law can also help you negotiate an agreement.
When there is only one property (the family home) to be settled, the matter can be fairly straightforward. However, when multiple properties are involved, the tax issues may become complicated and have unexpected and unintended costs. In order to prevent a challenging situation from becoming even more difficult, it is advisable for separating couples to seek professional tax and legal advice when investment properties are concerned.
Some other points to consider:
- Regardless if one partner leaves the home, they will not lose their right to a share of the house or other property.
- In the event of a divorce, the court may rule that a spouse has a share of the property or all of the property (depending on individual circumstances) even if the property is not in their name.
- A person may have a right to a share of a house even if it is in a third party’s name
Many divorcing couples have gone to Paterson & Dowding, trusted divorce lawyers in Perth for advice and assistance on property and related financial matters as well as for a range of family law matters. Paterson & Dowding have gained a wealth of skills, knowledge and experience in family and divorce law over the past 50 years and have a reputation for clarity and effectiveness. To get in touch with these leading Perth divorce lawyers, please call them on 08 9226 3300 or visit www.patersondowding.com.au.