Legal Question in Family Law in Maryland

maritial property

Spouse inherit house appraised at $76,000. Rents for 5 yrs. Sells for $118,000. Spouse buys a house for $130,000 in own

name. Spouse leaves primary residence and assumes a $40,000

mortgage. Is the realized capital gain or any part of newly

aquired property considered maritial property? Date of inheritence approx. 1991. Date of sale and new purchase 1996

No legal separation or final divorce as of today, 08/08/02.


Asked on 8/08/02, 10:15 am

1 Answer from Attorneys

Carolyn Press Chung & Press. P.C.

Re: maritial property

Marital property issues involving property which is part marital and part non-marital get pretty complicated, so hang onto your hat: The value of the house when he inherited it is not marital property. If he inherited it with a mortgage and made payments during the marriage, the increase in equity from those payments is marital. If he made improvements during the marriage with funds which were not inherited, the value of those improvements is marital. If he devoted any significant time to managing the rental property in order to earn rental income, that income and anything he purchased with it would be marital property. If the increase in value of the property from the time of inheritance to the time of sale was based in any part on improvements, that increase in value is marital property. Any increase which is purely capital gain, based on no effort on his part, is not marital property. It might be helpful to you to give a close look at what he reported as capital gain on his income tax, since he most likely claimed every expense he could to minimize the capital gain (that could come back to haunt him). If the proceeds of the sale were kept strictly separate from any joint account or any account containing any income he earned during the marriage, the value of those funds rolled over into the next property is not marital. But he bought a more expensive house with a mortgage. Any increase in equity based on mortgage payments during your marriage (to the date of the divorce or the date of a separation agreement, not to the date he leaves you) is marital property. This is assuming he does not have inherited funds in a separate account which he is using to pay the mortgage. You will need a good lawyer experienced in family law to help sort this out and make your case to the court.

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Answered on 8/08/02, 4:01 pm


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