Diversification is the investment strategy whereby holding a variety of assets creates a greater long-term return because the variety reduces risk. In addition to thousands of tradable stocks and bonds, the average investor may also own real estate. The advantage of owning real estate as an investment is that you can borrow to buy the real estate (creating a higher return), the interest on that loan is tax-deductible, the calculated depreciation is also tax-deductible and, if the property is rented, there is rental income. The downsides to owning property are that the property must be physically maintained, the property tax must be paid and the property can only be sold all at once (unlike stocks or bonds which can be purchased in shares or certificates). One of the biggest downsides to owning a rental property is what to do with the rental property in the case of a divorce. A rental property has value that must be distributed, income that must be accounted for and liabilities that someone needs to be held responsible for. So, how is a second home or rental property handled in an Illinois divorce? Is The Rental Property Marital Or Non-Marital? In Illinois, the first step in determining what happens with any property in a divorce is determining whether that property is marital or non-marital. “The court shall make specific factual findings as to its classification of assets as marital or non-marital property, values, and other factual findings supporting its property award.” 750 ILCS 5/503 Non-marital property is not divisible in a divorce. If a piece of real estate is held in one person’s name and determined to be marital property, that person will leave the divorce as the sole owner of that property. “[T]he court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d) In the case of rental property that is deemed non-marital, the income from that property shall also be deemed non-marital. “[I]ncome from property acquired by a [non-marital] method” 750 ILCS 5/503 shall remain non-marital. Marital property, however shall be divisible in a divorce. Illinois divorce courts “shall divide the marital property” 750 ILCS 5/503(d) Marital property is any property that was acquired during the marriage (with lots of exceptions) “‘[M]arital property’ means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage” 750 ILCS 5/503(a) If the property was acquired via an inheritance […]
from Russell D. Knight | Family Lawyer Chicago https://rdklegal.com/rental-property-in-an-illinois-divorce/
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