When you are getting a divorce, all of your financial assets will be put into a ‘matrimonial pot’ including your home, property, investments, personal savings, shares, pensions and inheritance. If you have an investment property, this will also be considered. The way in which it will be divided rests very much on your own unique circumstances. If you are in the process of Splitting up and are wondering how your property or asset that you have taken on as investment could be treated, read on.

Your options for the future of your property investment

Taking out an investment in a property is a big financial decision and will likely have been decided based on the strong return potential it offered. It is therefore likely that its value is high. In a divorce, you will have numerous options about how you can determine its future.

You could continue to rent out the property together and split any rent that is paid by a tenant. This option may seem favourable, but having a financial link to a former partner is not necessarily viable and can lead to disputes. If this is the route you think could work it’s important to have a strong and mutually understanding relationship with your ex-spouse and establish boundaries from the start.
Sell the property and share any equity that’s in it from the sale. This is often a preferred option as it allows each partner to receive any equity from a sell to build a new independent life, allowing them to put down a deposit on a new home and providing a clear split with no lingering financial ties.
One of the spouses could ‘buyout’ the other. Investment properties are often taken on as long-term ventures, with one spouse still wanting to receive a return on it at some point in the future. In this case, it can work out well if they buy their partner out. To do this, both parties will have to agree on the buyout, have the property valued, decide on how the new sole owner will finance it and seek assistance from a conveyancing solicitor.
During a divorce, another common avenue is to offset any other assets within the matrimonial pot, for instance, a pension, another property or other savings and investments. One spouse may receive the family home, while the other keeps the property investment, for example.

If you own a property overseas

If your investment property is based overseas, generally speaking, it will be included in the matrimonial pot too and you will need to declare this in your divorce documentation. One of the first steps is to gain a valuation, this will likely be from an estate agent or valuer based at the location of the property. Both spouses can jointly instruct an expert to gain the valuation for the courts to consider alongside any other assets.

Tick list for getting it right during asset division in divorce

Do not try to hide any assets or transfer them to other parties in an attempt to discount them from a financial settlement
Even if you own a property in just your name, you will need to ensure full disclosure of it and its value
Remember that in order to reach a fair outcome the courts may refer to Section 25 of the Matrimonial Clauses Act 1973 and consider the non-financial contributions made by each party, for example, looking after the home or raising children.
Sometimes, investments could be considered a non-matrimonial asset by the courts. This can be the case if the asset was acquired before the marriage took place, after you separated or if the property was inherited, for example. However, it’s important to remember that all financial assets are established on a case-by-case basis.

Conclusion

During any financial settlement, it’s important for your decisions to be based on the outcome that will suit both of you as well as any children that are involved. Divorces with investment properties can sometimes become complex, so, it’s advisable to gain legal advice from an experienced family lawyer from the beginning