Nevada divorce involving significant real estate holdings — multiple investment properties, commercial real estate, vacation homes, or a principal residence with substantial equity — requires careful attention to characterization, mortgage obligations, tax consequences, and the practical mechanics of dividing illiquid assets. Real estate is often the largest asset in a Nevada divorce and the most difficult to divide cleanly.
Characterization of Real Property
Nevada follows community property principles for real estate: property purchased during the marriage with community funds is community property regardless of whose name appears on the title. Property owned before marriage or received as a gift or inheritance during the marriage is separate property, but commingling — using community funds to pay the mortgage, make improvements, or refinance — can create a community property claim on the equity gained during the marriage through those community contributions. The Phoenix case framework requires tracing separate property contributions precisely to rebut the community property presumption; without clear tracing evidence, the community property presumption controls. Title held as joint tenants or community property with right of survivorship does not itself determine community vs. separate character — the source of funds controls.
Division Options and Tax Consequences
Real estate division in Nevada divorce takes three common forms: sale with proceeds split, buyout by one spouse with the other receiving equivalent assets, or deferred sale on an agreed trigger event. Sale is the cleanest but triggers capital gains tax — the IRC § 121 exclusion ($500,000 for a couple filing jointly, $250,000 for a single filer) applies only if the property has been the principal residence for at least two of the five years preceding the sale. A spouse who receives the property and later sells it as a single person may lose half the exclusion. Buyout requires the remaining spouse to refinance the mortgage in their own name alone — not just a quitclaim deed, which removes the departing spouse from title but leaves them on the promissory note. Investment properties carry depreciation recapture at ordinary income rates when sold, a tax consequence that reduces the net value each spouse actually receives.
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Hauser Family Law handles complex Nevada divorce cases involving significant real estate portfolios. Contact us for a consultation.