According to the Housing & Community Development Network of New Jersey, more than one-third of New Jersey residents rent their homes. If you’re going through a divorce, there’s a good chance you will need to consider what happens to a rental property. Who gets to continue drawing rental income after the divorce? Could you share this income? These are questions you might want to ask your New Jersey divorce lawyer.

Who Purchased the Rental Property and When?
When approaching rental properties in New Jersey, spouses should determine who originally purchased the property. They should also consider the date of the purchase. Depending on these factors, the property may pass to only one spouse after the divorce.
If one spouse purchased the property before the marriage, they may keep that property after the divorce. This is because all property acquired before the marriage is “separate property.” Separate property is not eligible for division between spouses.
Separate property also includes assets acquired after the date of separation. For example, a spouse might receive a cash bonus after moving out of the family home. They may then use this cash to put a down payment on a rental property. Depending on the circumstances, this may also become separate property. Another example is an inherited rental property received at any point during the marriage.
If the rental property is separate, then any rental income earned during the marriage is also separate. However, this income often becomes commingled (mixed) with marital property – and it could be difficult to “unravel” without help from a forensic accountant.
What if We Purchased the Rental Property During the Marriage?
If the rental property was purchased during the marriage, it will likely become marital property in a divorce. As a result, each spouse may be eligible to receive approximately half of its value. The obvious solution is to sell the property and divide the proceeds equally. However, many spouses may wish to continue earning rental income without selling the property. In this situation, it may be possible to create some kind of deal that allows the spouses to continue co-owning the property after the divorce.
In contrast, one spouse may have no interest in co-owning the property. In this situation, the other spouse might decide to “buy out” their ex by providing them with a cash payment worth 50% of the property’s value. This could allow both spouses to get what they want. Note that many of these more creative and flexible deals are only possible through alternative dispute resolution (ADR) methods like mediation.
Handle Property Division With a New Jersey Property Division Lawyer
A property division lawyer in New Jersey may be able to help you address complex questions regarding rental properties, investments, and other complex assets. Spouses can work together to achieve a mutual agreement on how to handle not only the rental property itself but also the passive income that it generates. Learn more by scheduling a consultation with Giro, LLP, Attorneys at Law.