Marital Home - creative solution? or no-go?


#1

Question: Is there any precedent for an arrangement where one spouse buys out the marital home, and leases it to the dependent spouse for a period of time?

Objectives:
1) Dependent child can remain at current school until high-school graduation (2.5 yrs).
2) Dependent child can continue to own multiple pets. (rental properties typically charge extra or do not allow)
3) Make an affordable solution for a temporary period.
4) Benefit both spouses.

Background:
Due to the economy, both parties agree that the current marital home value is at or lower than the current mortgage balance. Current rental options for dependent spouse and child are similar in cost (if home is re-financed) but have many disadvantages over staying in marital home. Supporting spouse cannot afford to rent small apartment for himself while paying mortgage + alimony + child support less rent from dependent spouse, so it would need to be a temporary arrangement. Supporting spouse is willing to sacrifice living conditions temporarily to allow dependent child the advantages of this arrangement.

Plan:
Transfer the deed to the supporting spouse.
Refinance mortgage - removing dependent spouse.
Supporting spouse would still pay alimony and child support
Supporting spouse would be responsible for any loss following the lease, or receive any gain following the lease - whether the house were to continue as a rental property, become the primary residence for the supporting spouse, or be sold.
Sign lease with the following general bounds:
1) period of 2.5 years
2) Rental rate would be affordable to dependent spouse and include utilities
3) Rental rate would be less than mortgage+taxes+utilities.
4) Supporting spouse would have tax benefits for the real estate taxes and utilities (as any rental property owner).
5) Any sub-leasing (of any of the 3 spare bedrooms in house) must be agreed upon, and proceeds would be split between the supporting and dependent spouse.
6) Co-habitation of the dependent spouse would negate the current lease (renegotiation may be an option).

Open to any suggestions, caveats, theory flaws, other options.

Thanks in advance!


#2

This solution sounds fine to me. Many couples are doing things like this because the housing market is not too good right now, and so they hold on to the property for another couple of years in the hopes that they can sell it for more money at that time. You are also doing this for the benefit of your teenage child, which is respectable. As far as the details are concerned with her being your tenant, you should check with an attorney who handles landlord/tenant issues. We at Rosen are exclusively family law, so another attorney would be better equipped to answer those specific questions.


#3

Thank you for reviewing this. I have already begun research for what tax benefits I might have, and my next step is to find / contact an accountant with this specialty. After meeting with an accountant, I would definitely seek advice from an attorney in that area.

Thanks again. This is a great service.


#4

You are most welcome!