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3 strategic elements of dividing real estate during a divorce

Real estate represents a unique class of assets — mostly because each parcel of real estate is unique. Even in a condo building with multiple identical floorplans, each unit could be on a different floor, have different updates, have different exposures and so on.

You also probably have some emotional attachment to the real estate in your portfolio. This can make it difficult to divide these assets during divorce.

1. Affordability

US News provides a good perspective on the idea of affordability in real estate division. Their article argues that you do not want to obtain an asset that would be difficult for you to afford.

Real estate, in particular, has significant carry costs. You have to pay for maintenance, for taxes and for any updates you might want to make. Ideally, these costs amount to less than the growth in value of your home, but that is not always the case.

2. Market value

Another thing that could influence your strategy would be the current fair market value of the real estate. There is a natural up and down annually, and trends that change over multiple years.

Is now a good time to sell? If so, you might behave differently than you would if the market were down.

3. Personal priorities

It is probably also a good idea to think about what you want in a positive sense. This means avoiding a competitive attitude towards these assets.

For example, do you really want your vacation home, or do you want your spouse not to have it? Cooler heads often prevail. In some situations, you could potentially even use your spouse’s competitiveness to get the things that you truly want, giving up less desirable property.

Dividing real estate is complex. The accounting, the tax, the sales — everything is a process. However, before you get into the tactical details, it sometimes helps to consider top-level strategy.