How is home equity divided in a New York divorce?

In a New York divorce, the family home can be one of the biggest financial issues. The court first decides whether the home is marital or separate property, then values the equity and decides how to divide it under New York’s equitable distribution law.

Is the home marital or separate property?

Property bought during the marriage is usually marital property, even if only one spouse’s name is on the deed. A home bought before the marriage is usually separate property. A gift or inheritance from someone other than a spouse may also count as separate property. Things can get more complicated if a separately owned home increases in value during the marriage. In some cases, the increase may stay separate. In others, the increase may be linked to the other spouse’s efforts or contributions.

How does the court decide each spouse’s share?

New York does not always divide property equally. Instead, the court looks at many factors, including:

• Each spouse’s finances
• The length of the marriage
• Each spouse’s direct and indirect contributions
• Whether a custodial parent needs to stay in the home
• Tax consequences
• The parties’ likely future finances

The court then decides what division is fair under the law.

What happens to the home’s equity?

Home equity is the home’s value minus the mortgage and other liens. After the court decides what part of that equity is marital, the spouses may handle it in different ways:

• Sell the home: The parties sell the house, pay the mortgage and costs and divide the remaining proceeds.
• One spouse keeps the home: One spouse keeps the house and gives the other spouse other assets or a payment for their share.
• Keep the home for now: In some cases, the spouses may keep the home jointly for a period of time.

The mortgage, taxes, insurance and upkeep still matter. A transfer of title does not always remove a spouse from the mortgage.

Why records matter

Deeds, mortgage papers, closing documents, appraisals and repair records can help show when the home was bought, how it was paid for and how its value changed. Home equity disputes often turn on property history, value and the marriage’s finances. A New York family law attorney can review the records and help explain how the home may be divided.