Calculating how much to claim for portion of house value during divorce

[Anonymous]

Anonymous wrote:OP still hasn't answered by how much her husband out earned her. I'm thinking she didn't pay much, if anything, toward the mortgage on this property. If I were her Ex, I'd fight to the death.

I worked part time and stayed home with the children part time. STBX earned several times my income. I don't know how relevant that is, though?

I didn't directly pay the mortgage company anything (I did pay them indirectly, in the form of rent checks I paid to STBX before we were married). As I mentioned earlier, I also paid a significant amount toward house renovations and put in by far the majority of time and labor on that effort, but that was also before we were married, which I understand may mean that I'm SOL on those contributions.

As for what happened while we were married, my understanding from my lawyer is that it doesn't matter whether or not I actually wrote checks to the mortgage company then, because the income used to pay the mortgage (regardless who writes the check) is considered joint marital income if it's done during a marriage.

Thank you for all the input and ideas so far. I'll look up amortization tables and plug in some numbers and see what comes out, and how much variability there is when I change the inputs, since I'll be guessing on those.

[Anonymous]

Anonymous wrote:OP here. It's the only asset we're dividing, other than retirement funds, and it's a big one. I'm not going to just walk away from several hundred thousand dollars when I have no other major assets to my name and gave up a plan to buy another property in the same area when STBX and I got together. I don't want to waste our time calculating down to the dollar, which is why I want to figure out the simplest way to put some reasonable number to it, even if it turns out to be a low estimate.

We were married seven years.

Get the difference in County assessed value at time of marriage vs. County assessed value today and then figure out % of split (50/50, 40/60. etc). Very simple....

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. It's the only asset we're dividing, other than retirement funds, and it's a big one. I'm not going to just walk away from several hundred thousand dollars when I have no other major assets to my name and gave up a plan to buy another property in the same area when STBX and I got together. I don't want to waste our time calculating down to the dollar, which is why I want to figure out the simplest way to put some reasonable number to it, even if it turns out to be a low estimate.

We were married seven years.

Get the difference in County assessed value at time of marriage vs. County assessed value today and then figure out % of split (50/50, 40/60. etc). Very simple....

Yes. Since you do not have the mortgage paperwork, use county assessment numbers.

But how do you not have any access to the mortgage documents? Didn't your husband share financial information with you when you were married?

I manage all the bills and household expenses, but my husband has all the passwords and can access any of the paper bills any time he wants.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. I don't have any of the mortgage documents and it may take a long while to get access to them. Is there some decent way to at least come up with a rough estimate of how much equity would have been paid down between year X and year Y? I know the initial purchase price, I am guessing the down payment amount was about 20%. I also know how the house value changed over time, and roughly what the monthly mortgage payment was. I think it is a 30-year mortgage, like most mortgages. I can probably look up historical interest rates and take a guess at the interest rate too.

Does it make sense that I can come up with a reasonable rough figure by plugging all that into some formula, or are there just too many unknowns?

I mean, the obvious answer would be to run an amortization table right? Also, I agree with the previous posters that you would only be entitled to a % of the total appreciation based upon the equity you contributed. That portion of the appreciation attributable to his pre-marriage ownership interest would be his.

Why? Appreciation on a house has nothing to do with the amount of equity in a house. I am not OP, just think it is an interesting question. Why should now much equity in a house matter for purposes of appreciation. If I buy a house for 500k and put down 10% and sell the house 7 years later for 900 k, I get that 400k. I don't get 10% plus how much ever equity I have paid the bank.

Because if he owned the house 100% he would be entitled to all of the appreciation so you have to split out that portion of the appreciation attributable to his pre-marital interest. The example you provided is inapplicable for numerous reasons.

Wow. Not PP. That's an interesting thought that the appreciation is essentially a return on the equity. Is that really how they do it? It seems that to do a truly accurate calculation would require going month by month over the 7 year marriage and first figuring out how much principle was paid in each month then second estimating the house value to determine what fraction of the house that month's principle bought as a marriage asset -- essentially each month the principle is larger but it's also buying a chunk of a larger asset. Seems like a lot to disagree on with the way appreciation in many neighborhoods has fluctuated over the past 7 years.

I can get my mind to the idea that 1/3 of the interest paid each month is just the tax write off for the household and not part of the investment in the home, but I'm wondering about the other 2/3 of the monthly interest. Seems like that's the effective interest paid on the borrowed percentage of the homes value (that returned a much higher rate as appreciation). Is that a household investment with borrowed money or is her DH providing the house to the household at that cost because it's his name/credit/etc?

Sorry if this appears coldly analytic PP. I'm not taking sides, but it seems like there are several ways to spin it and I'm curious.

[Anonymous]

I think you would have to figure out how much of the original loan amount was paid down during the marriage, so you can calculate what percentage was paid before and after the marriage. For example, if he/she had a $1 million mortgage and paid down $500k before the marriage and $250k during, I would argue that 1/3 of the "original" equity in the house is joint property. I would then deduct the value of the house at the time of the marriage from the current value, deduct the remaining mortgage value and then divide 1/3 of the remainder 50/50.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. It's the only asset we're dividing, other than retirement funds, and it's a big one. I'm not going to just walk away from several hundred thousand dollars when I have no other major assets to my name and gave up a plan to buy another property in the same area when STBX and I got together. I don't want to waste our time calculating down to the dollar, which is why I want to figure out the simplest way to put some reasonable number to it, even if it turns out to be a low estimate.

We were married seven years.

Get the difference in County assessed value at time of marriage vs. County assessed value today and then figure out % of split (50/50, 40/60. etc). Very simple....

Yes. Since you do not have the mortgage paperwork, use county assessment numbers.

But how do you not have any access to the mortgage documents? Didn't your husband share financial information with you when you were married?

I manage all the bills and household expenses, but my husband has all the passwords and can access any of the paper bills any time he wants.

Don't us county assessment numbers. Depending on the jurisdiction, they can be wildly off the actual market value.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. I don't have any of the mortgage documents and it may take a long while to get access to them. Is there some decent way to at least come up with a rough estimate of how much equity would have been paid down between year X and year Y? I know the initial purchase price, I am guessing the down payment amount was about 20%. I also know how the house value changed over time, and roughly what the monthly mortgage payment was. I think it is a 30-year mortgage, like most mortgages. I can probably look up historical interest rates and take a guess at the interest rate too.

Does it make sense that I can come up with a reasonable rough figure by plugging all that into some formula, or are there just too many unknowns?

I mean, the obvious answer would be to run an amortization table right? Also, I agree with the previous posters that you would only be entitled to a % of the total appreciation based upon the equity you contributed. That portion of the appreciation attributable to his pre-marriage ownership interest would be his.

Why? Appreciation on a house has nothing to do with the amount of equity in a house. I am not OP, just think it is an interesting question. Why should now much equity in a house matter for purposes of appreciation. If I buy a house for 500k and put down 10% and sell the house 7 years later for 900 k, I get that 400k. I don't get 10% plus how much ever equity I have paid the bank.

Because if he owned the house 100% he would be entitled to all of the appreciation so you have to split out that portion of the appreciation attributable to his pre-marital interest. The example you provided is inapplicable for numerous reasons.

Wow. Not PP. That's an interesting thought that the appreciation is essentially a return on the equity. Is that really how they do it? It seems that to do a truly accurate calculation would require going month by month over the 7 year marriage and first figuring out how much principle was paid in each month then second estimating the house value to determine what fraction of the house that month's principle bought as a marriage asset -- essentially each month the principle is larger but it's also buying a chunk of a larger asset. Seems like a lot to disagree on with the way appreciation in many neighborhoods has fluctuated over the past 7 years.

I can get my mind to the idea that 1/3 of the interest paid each month is just the tax write off for the household and not part of the investment in the home, but I'm wondering about the other 2/3 of the monthly interest. Seems like that's the effective interest paid on the borrowed percentage of the homes value (that returned a much higher rate as appreciation). Is that a household investment with borrowed money or is her DH providing the house to the household at that cost because it's his name/credit/etc?

Sorry if this appears coldly analytic PP. I'm not taking sides, but it seems like there are several ways to spin it and I'm curious.

I don't think you have to calculate the appreciation month by month, because it doesn't really matter how much the asset varied in value over time, what really matters is how much it is worth at the time of the divorce. If the house had dropped in value, it wouldn't matter if it was worth more five years ago.

[Anonymous]

Not sure why your lawyers isn't guiding you through this. You should get half of the increase in value+half of the increase in equity during your marriage as your portion of the house.

There is no way to do what you want without some real research, and I'm not quite sure why you wouldn't want to invest a little bit of effort and money into it if the martial home is a substantial investment.

You need to get a hold of a recent mortgage statement, so you know exactly what the equity is and what amount remains to be paid. You also need to know what the equity was when you both married. You will need to figure out the value when you bought it and its value now - get an appraisal done for the value now.

Your STBX may not want to give you these documents, but it is in his/her interest to do so. If you can't work this out and get the courts involved, then your STBX will have to provide these documents in discovery if you litigate. Very expensive and will probably cost more than whatever money s/he is saving by not handing over the documents. Although I guess that depends on what s/he is hiding by not turning over the documents...

[Anonymous]

You really did to make your lawyer guide you through this - if he/she won't, that's an indication of a bad lawyer. FWIW, I had a case where rent payments and renovation costs were counted in the distribution of the home's equity. So don't rely on poster's here for good advice - you absolutely can make an argument that funds used while in a long term relationship but prior to marriage are part of your equity calculations.

[Anonymous]

OP, do you have a copy of your tax returns?

[Anonymous]

Anonymous wrote:OP here. I don't have any of the mortgage documents and it may take a long while to get access to them. Is there some decent way to at least come up with a rough estimate of how much equity would have been paid down between year X and year Y? I know the initial purchase price, I am guessing the down payment amount was about 20%. I also know how the house value changed over time, and roughly what the monthly mortgage payment was. I think it is a 30-year mortgage, like most mortgages. I can probably look up historical interest rates and take a guess at the interest rate too.

Does it make sense that I can come up with a reasonable rough figure by plugging all that into some formula, or are there just too many unknowns?

Where is the house? Look at the recorder of deeds. The info about the original mortgage, amount, amount of downpayment, terms etc, should be available online (though that depends by state). In DC it is available online.

[Anonymous]

And see, I'm going to make a completely different argument. I would push for him to sell the property and split the profits 50/50 and my argument would be that you need that money to make a down payment on a house for you and kids to live in. Based on what you've outlined I'm not sure how you are going to afford to live in this area otherwise.

[Anonymous]

Anonymous wrote:And see, I'm going to make a completely different argument. I would push for him to sell the property and split the profits 50/50 and my argument would be that you need that money to make a down payment on a house for you and kids to live in. Based on what you've outlined I'm not sure how you are going to afford to live in this area otherwise.

Why not just give her 100% of the profits from the house? I mean, as long as we're in the land of fairies and unicorns here.

[Anonymous]

I'm in Va and the marital home is joint asset even if purchased prior to marriage. Unless your husband and you never co-mingled AND he purchased the house in full with third party funds (inheritance) and you didn't live in it then the house is half yours at least. My recently divorced neighbor got the house in full as SAHM because her husband is the one that left. YMMV.

[Anonymous]

Anonymous wrote:OP, do you have a copy of your tax returns?

I have asked STBX for copies of those but have not received them yet.