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Say I buy a home that is worth 200k and I pay down 100k principal of the loan before marriage. After marriage I continue to pay the mortgage.

  1. Is what I pay for the mortgage considered community property if it comes from my job salary?

  2. At the point when the home is paid off and we're married, what is the division between separate and community property?: 50% or 100k separate property and 50% or 100k community property? -- or -- is it that I bought the home before marriage and the home and its debt belongs all to myself (200k or 100% separate property)?

  3. Additionally, if we go to sell this home and it sells for 400k. Does it get divided based on the percentage of separate property and community property. For example, in this case, 50% separate property = 200k and 50% community property = 200k)? -- or -- only the original 100k is separate property and the 300k community property when the home is sold.

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In California, each spouse has a vested present interest in 50% of all of the marital property of the couple. The circumstances in which a single spouse can dispose of or transact marital property vis-a-vis a third party are complex in some cases, but in the case of a residence, both spouses would be required to sign off on a sale, even if the residence was titled only in one spouse's name.

Marital property consists of everything owned by the couple that isn't separate property. Separate property consists of the property owned at the date of the marriage and all property acquired by gift or inheritance during the marriage, property traceable to conversions of separate property (including rents, profits, or other money you earn from your separate property). If property is partially community property and partially separate property, appreciation and proceeds from the mixed property is pro-rated. And property you buy with separate property is also separate property.

There are other technical rules. For example, governing transfers of property from another community property state which is quasi-community property.

From a practical perspectively, most importantly, a trust created by a third party is neither separate property nor marital property, it is property of the trust and not of either spouse). The burden of proof is on a divorcing spouse to establish that property is not marital property.

  1. Is what I pay for the mortgage considered community property if it comes from my job salary?

The salary you earn during the marriage is community property. So, when you pay the mortgage with your salary received during the marriage you are converting one kind of marital property into another kind of marital property.

The fair market value of the home, net of the mortgage on the date of the marriage is separate property.

If $100,000 of debt on the house has been paid off during the marriage, that $100,000 is community property, leaving $100,000 of pre-marital separate property and $100,000 of community property.

If the home is then sold free and clear net of costs of sale for $400,000, then $100,000 of the proceeds are separate property, $100,000 of the proceeds are community property, and $200,000 of the proceeds are appreciation is is pro-rated between the two, in this case, evenly. so $200,000 of the proceeds is separate property and $200,000 of the proceeds is marital property.

Taxes, insurance payments, and interest payments as opposed to principal payments, do not add to the community property value of the house, as they are current expenses that don't change the value of the property under California law, even though money is fungible.

To determine the present shares of separate and community property in a residence, you assume that it was sold for fair market value on the date that you are evaluating it.

Another example can be found here.

The default rules can be, and often are, changed by agreement of the parties in a pre-nuptial or post-nuptial agreement. The treatment of appreciation and carrying costs varies considerably from one community property state to another as well.

There are more complicated scenarios that are spelled out by case law and the details of California's community property statutes when more detailed and varied facts are considered (e.g. concerning what date is used to determine value for divorce purposes and which costs are principal v. carrying costs), but that is the basic concept.

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  • How does rental income that is earned before marriage work? After marriage, does rental income become community property or stay as separate property?
    – Venus
    Mar 3 at 4:01

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