Property financing in the event of divorce: What you should know
Property financing is often a key issue in a divorce, especially if the property has not yet been paid off. Find out what legal and financial aspects need to be considered and how you can find a fair solution.
Shared responsibility for the property loan
If both spouses have signed the loan agreement, they are liable to the bank as joint and several debtors. This means that each partner is responsible for the entire loan amount, not just their supposed share. This model minimises the bank's risk, but presents both partners with major challenges in the event of a separation.
Early repayment penalty for property sales
- If the property is sold before the fixed interest period expires, an early repayment penalty is usually payable.
- The amount of this fee depends on the loan amount, the remaining term and the interest rates.
- As many loans have long terms, this fee is often unavoidable in the event of a sale.
Options for the shared property
If the property belongs to both partners, there are various options available:
- Sale: Selling the property is often the most practical solution if no one can bear the running costs alone.
- Takeover by a partner: One partner can take over the property if they can afford the financing and maintenance costs alone. The bank must agree to the other partner's withdrawal from the loan agreement.
- Letting: If both partners are in agreement, the property can also be rented out to cover running costs.
Tax aspects
When selling a property, tax rules must be observed, in particular the speculation tax in accordance with §23 EStG:
- If the property was owner-occupied in the year of sale and in the two preceding years, speculation tax does not apply.
- If one partner moved out during this time, the tax may still be due.
Conclusion: clarification of financing is crucial
The decision on how to deal with the joint property requires careful planning and legal advice. Whether selling, taking over or letting - a clear regulation ensures security and prevents disputes.
Get non-binding advice now
Robert Schüßler
Property valuer (EIA and IHK)
Note: This text is for information purposes only and does not constitute legal or tax advice. Please consult an expert if you have individual questions.
