Living life on the Emerald Coast is a combination of natural beauty and a laid-back lifestyle that many people associate with vacation life. The beautiful beaches here lead many people to search out vacation homes in the area. For those who have homes in Destin or Okaloosa Island, rental incomes are often a nice source of income.
Those properties that bring in money can become some of the most challenging assets that have to be divided if the owners go through a divorce. This is because the vacation home likely functions as a business instead of just a piece of real estate.
Why is the business aspect of the property such a big deal?
A regular piece of real estate could go through an appraisal process to determine the fair market value of the home, but when the property is one that brings in an income from short-term rental, that standard appraisal isn’t sufficient. This means that homes placed for direct short-term rentals or on websites like Airbnb or VRBO have to go through a more comprehensive appraisal process.
In places like Fort Walton Beach and other similar destinations, the income stream has to be considered, but that’s not the only factor that goes into determining the value. Equity in the property, any debts like outstanding service contracts, furnishings, booking, management fees, repair costs and tax records also have to be considered when trying to determine the actual value of the property for the purpose of property division.
One issue that can be challenging for some short-term rental properties is that the rental income may not be consistent. It can fluctuate with seasons or with area events. This makes it an even more complex process to determine the value of the property.
How is the property handled in divorce?
The vacation property is handled like any other assets in a Florida divorce. Both parties can continue to co-own the property under a partnership agreement. They may sell the home and split the profits or use it to pay off marital debts. One party may buy out the other party’s equity in the home.
There’s no easy answer to how an Emerald Coast vacation property should be handled if the owners divorce. It’s beneficial for each party to work with someone who understands Florida’s laws and can help them to evaluate the options to determine which one is in their best interest.