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How do you split home equity in an Arizona divorce?

On Behalf of | Sep 20, 2022 | Divorce

The home where you live is probably your most valuable asset, with the possible exception of retirement savings or a small business you own. You and your spouse have probably invested thousands of dollars in mortgage payments in the last year alone, to say nothing of your down payment and the improvements you have made to the property.

The investments you have made in your home may be your biggest deterrent when considering a divorce. Although the Arizona real estate market is strong, you may worry about losing your share of the equity in the home and not being able to buy a new house later.

Thankfully, that is not a realistic concern for most divorcing adults. Arizona’s community property rules help protect your interest in the home. You have a right to your share of the home equity. How do you potentially divide that equity when you divorce?

By refinancing the home

A judge can order that one of you will keep the marital home. Typically, doing so requires that you execute and record a deed. The spouse keeping the home will also need to refinance the property so that the other spouse is not on the new mortgage. They can use that refinance process to cash out equity and pay their spouse for half of what the home is worth.

By retaining other assets

Instead of directly dividing the home equity through refinancing, you may be able to request your share of equity in the form of other property. An investment account or retirement savings fund could be worth enough to offset the value of your home equity. So could a small business that you started during the marriage. You could also ask your ex to assume more marital debt to achieve the same goal.

By selling the home

Sometimes, it just doesn’t make sense to have one of the spouses keep the marital home, especially if they don’t have much equity accrued in the property yet. Either through mutual agreement or court order, you may need to sell the home and then divide the proceeds from that sale with your ex.

Any of these approaches can help ensure you receive your fair share of home equity in an upcoming Arizona divorce. Learning more about the rules for community property division will help you protect yourself as you negotiate or litigate your divorce.