Dividing Real Estate in BC can be a very contentious under the BC Family Law Act. Make sure you speak to a BC Real Estate Division Lawyer before agreeing on how to divide real estate. Many spouses have a family home in which they reside, commercial properties, vacation properties and/or rental properties. As a result, there are important issues you need to be aware of when it comes to Dividing Real Estate in BC:
Dividing Real Estate Value in BC
The value of real estate such as the family home are usually determined at the time of trial and not the time of separation. So a family home may be worth $1,000,000 at the time of separation but two years later and at the time of trial, it may be worth $1,500,000. The general rule is that the $1.5 million dollar valuation gets divided equally. This is regardless of who resided at the family home after separation and paid the mortgage and other fees. It is always good to immediately settle your BC family law issues and not wait until trial to divide the family home. Sometimes it is unfair to give half of it to your spouse when he/she did not contribute to its expenses after separation.
But if you do find yourself in a situation where you resided at the family home after separation and paid for everything, you can make the following arguments:
- Value the family home as of the time of separation instead of trial;
- Let your spouse keep half of the value at the time of trial. But ask for half of all the contributions you have made back from your spouse; or
- Ask for more than 50% of the family home’s value because of your post-separation contributions.
It is always better to get in to a BC separation agreement immediately instead of making the arguments above.
Types of Real Estate under BC Family Law
There are various types of Real Estate such as:
- The family home: a type of property that is often divided equally. You and your spouse must have resided in it prior to separation. At the time of dividing this real estate, you do not have to pay any capital gains taxes on it. You can buy out your spouse’s share or sell the family home and get half of its worth subject to ‘excluded asset’ arguments.
- Commercial real estate: this is the type of property which is often owned by a corporation. It is used for business or commercial purposes. Its value can be determined by having it appraised or valued as a part of the value of the entire business which includes shares, good will, shareholder loans, profit, etc. Again the value or commercial real estate is often determined at the time of trial ; subject to court’s discretion for compensation or reapportionment as discussed above. Be very careful about tax consequences arising from Dividing Real Estate which is commercial. You need to hold your spouse liable for half of taxes payable if these properties are to be divided. Capital gains taxes are one of the few taxes that can apply to commercial real estate. Consult with an accountant or a family lawyer to know the exact tax consequences.
- Rental properties: these are properties you don’t live in. You rent them out to produce rental income. Rental properties are also subject to division but selling them or buying them out can trigger capital gains or income tax consequences for which your spouse should be often 50% responsible for. Again, consult with a family lawyer or an accountant to know the exact amount of tax to be shared by your spouse.
When Dividing Real Estate in BC, You Have a Few Options
You and your spouse have the right to pick and choose which properties each of you will keep in case you do not want to divide every property in half. This is usually done by appraising all properties by hiring a professional appraiser. That person determines the total value. Then you can choose to buy the property out, sell it or have your interest bought out by your spouse.
Dividing Real Estate in BC can be a very complicated area of BC family law, contact us for more information or to set up an initial consultation.