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Divorce and the owner-occupied home

If you have a house for sale together, you will have to see which of you can and want to live in the house or whether you are putting the house up for sale. To make a good decision here, it is smart to make an appointment with the mortgage lender. This can see for you whether one of you can get the mortgage by name. If there is equity, you must also take into account that the mortgage will probably have to be increased in order to buy out your ex-partner. Can you both take over the house and are you unable to decide who is allowed to stay in the house? Then a judge will decide on this. If you both cannot get the mortgage completed, you can choose to keep the current mortgage as it is. The disadvantage of this is that you are still connected by that mortgage. Another option is sales.

One wants to sell and the other does not and can the other not take over the mortgage? In that case, the judge can give alternative permission for the sale of the house. It is also important to have a good look at the insurance or accounts that come with the mortgage. Do you have a bank savings account or insurance with which you can pay off the mortgage in the future? Then it is often in the name of both partners. This must therefore also be adjusted in the event of a divorce. The accrued value must be shared between the partners. You probably also have term life insurance. This will pay out when your partner dies. The question is whether this insurance will continue in the same way. Also consider adjusting the health insurance and contents insurance.

Divorce and the rented house Do you have a rented house and are you both on paper as a tenant or co-tenant at the housing association? Then you both have the same right to stay in the house. Can’t you figure this out together? Then hire a lawyer. This can ensure that you receive permission from the judge to continue to live in the house.

If one of you continues to live in the rental property after the divorce, while the other pays the rent, this will have tax consequences. If you pay the rent for your ex-partner, this is seen as a form of maintenance. The person paying the rent may declare this as a deductible item. For the person receiving the rent, this amount must be regarded as income. Housing and maintenance Do one of the two want to stay in the house, but is it difficult for those to pay the housing costs? Then you can agree that the other partner will continue to pay these costs. You can then see this financial contribution as partner maintenance. Because it is also seen by the tax authorities as spousal maintenance, you can deduct this contribution from the tax. This is allowed for two years. Your ex-partner will then have to declare his or her part of the notional rental value to the Tax and Customs Administration and you will have to continue to use the house as your main residence.

Own home reserve
If you are forced by the divorce to sell the joint home, there may be a capital gain from the home. You must divide this surplus value. At the Tax and Customs Administration, equity is included in the ‘home ownership reserve’. An owner-occupied home reserve can limit the possibilities for interest deduction when purchasing a new home.
You will face this limitation if you buy your own home again within five years. You must invest the full amount of the owner-occupied home reserve (your part of the equity) in the new home in order to deduct mortgage interest on this amount. The home ownership reserve lapses after those five years. If you buy a home under the amount of the home ownership reserve, you are always eligible for mortgage interest deduction.
Note: In addition to a capital gain, a buy-out sum is also regarded by the tax authorities as an owner-occupied home reserve. This amount also counts for five years for the additional loan scheme.

Notary:
In the event of a divorce, the owner-occupied home is an important asset. In order to distribute everything properly, it is important that a notary draws up a deed of division and has it registered with the Land Registry. That way, no transfer tax has to be paid if one of the exes gets the house registered. This deed of division states that the person who receives the house in name is now also liable for paying the mortgage. It is important that the mortgage lender also agrees to this. Do you need a notary who can help with this, then we would like to put you in touch with an affordable notary who can help you.
Do you have questions about breaking up and your owner-occupied or rental home? We are happy to help you with this. Feel free to leave your number with us, and we will call you back without obligation and give you advice on how to continue.