The property in the equalization: value, not the land register

Why the value counts and the land register plays no part

In the equalization of accrued gains it is solely the value of the property that counts, regardless of who owns it. The property enters the final assets of whoever owns it at its market value on the cut-off date (§ 1376 BGB). The equalization does not then shift any ownership: it is a claim for money (§ 1378 BGB). Whoever is in the land register alone stays the owner and at most pays compensation in money; the house does not change sides.

That is the core of the most frequent misunderstanding. Nobody gets “half the house”. What is equalized is half the difference between the two sets of accrued gains, and the value of the property is only one item in that calculation.

How is the value of the property determined?

What counts is the value achievable on the market on the cut-off date, that is when the divorce application becomes pending (§ 1384 BGB), regardless of the purchase price back then, of the assessed value for tax purposes or of one side’s desired price. Where there is a dispute, an expert determines it.

To be deducted from the market value are the encumbrances still outstanding: the land charge as drawn down, the remaining loan. Only the net value that remains after deducting the liabilities enters the accrued gains. A heavily encumbered property can therefore enter the calculation with a small, in extreme cases even negative, value even though its market value is high.

How is an inherited or gifted property treated?

Where a spouse inherits a property or receives it as a gift, it stays out of it in essence: it counts towards the privileged initial assets (§ 1374 (2) BGB), even where it arrives only during the marriage. What is subject to equalization is solely the increase in value up to the cut-off date.

The family home that was worth 320,000 euros at the time of the inheritance and 470,000 on the cut-off date therefore brings only the 150,000 euros of growth into the accrued gains; its full value stays out of it.

The property brought into the marriage

Anyone who brings a property into the marriage has it in their initial assets. So that mere monetary depreciation does not appear as a gain, its value at the time is projected forward to the final cut-off date using the consumer price index (§ 1376 BGB). Only the difference from the value on the cut-off date is the growth during the marriage that gets divided.

Balancing the value and using the property are two separate questions

Everything said so far concerns the value of the property in the accrued gains. The other big question, that is who stays living in it after the separation, who takes over the house, what happens with the joint loan and whether a partition auction looms at the end, is a question of ownership and of the matrimonial home and does not belong to the equalization of accrued gains.

The two levels interlock in the result but follow rules of their own; on that, matrimonial home, property & household goods and the property on separation.

How the equalization of accrued gains works as a whole, into which the property here enters as only one item, is explained by our page on assets & accrued gains. Where a business sits in the assets alongside the property, the business valuation comes on top.

Whether your property enters the calculation at its full value, only with the increase in value or adjusted for purchasing power decides considerable amounts. In a confidential first conversation we sort out which approach carries in your case.

Legal notice: This article is provided for general information and does not replace legal advice in an individual case. Any laws, deadlines and amounts mentioned reflect the state of affairs at the time of publication and may change. A binding assessment requires a personal consultation.