Gain on house sale - shared?

[abe1927]

I live in Kentucky. In 1994 I was single and purchased a house, 100% my own funds, only my name on mortgage. In 2004 I was married. We're thinking of moving to a new house. If I sell for $30,000 over the purchase price, will that gain technically be half mine, half my spouse's?

 

[Bali Hai]

I live in Kentucky. In 1994 I was single and purchased a house, 100% my own funds, only my name on mortgage. In 2004 I was married. We're thinking of moving to a new house. If I sell for $30,000 over the purchase price, will that gain technically be half mine, half my spouse's?

In the one year you were married, IF marital funds were used to pay the mortgage, she would be entilted to half that equity plus any appreciation during the same period.

Ex: $12k mortgage pmt. 2k interest: her half = $5k

property appreciation = $4k. her half = $2k

 

[LdiJ]

First, what has to concern you isn't gain, its equity. Equity being the amount of money you receive in excess of the balance due on the mortgage.

If you were divorcing, then she would be entitled to 1/2 of the equity that accrued during the marriage.

However, if you sink your equity into a jointly owned property, then its no longer your separate property.

Therefore, you might want to consider drawing up a post-nup agreement to ensure that you get your equity back in the case of a divorce.

 

[abe1927]

Thanks - that's what I suspected. Suppose we jointly get a new house, and I sink my equity from house #1 in it. But I still want to make sure the house #1 equity stays in my name. Instead of a separate post-nup, can we add a clause to the new mortgage stating "my initial contribution to house is 75% of down payment, spouse's is 25%" - and then down the road if something happens, my original equity from house #1 will be recognized by the law?

 

[Bali Hai]

Thanks - that's what I suspected. Suppose we jointly get a new house, and I sink my equity from house #1 in it. But I still want to make sure the house #1 equity stays in my name. Instead of a separate post-nup, can we add a clause to the new mortgage stating "my initial contribution to house is 75% of down payment, spouse's is 25%" - and then down the road if something happens, my original equity from house #1 will be recognized by the law?

"Down the road" the fur will be flying and you'll want to have taken every legal precaution now to protect your interest then.

Do the post-nup and be cyrstal clear. Get an attorney to draft it.

Down the road her lawyer "Mr. Slick, attorney at law", could argue that you co-mingled seperate property and the 75% vs. 25% means nothing.

Don't take any chances.