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Question: What if a Refinancing is Buying Out Separate Property?
Answer: All refinancing proceeds are treated as marital property.
Therefore, if the refinancing will buy out separate property, then you will need to create a second real estate property to reduce the marital property balance and increase the separate property balance.
In that second real estate property, which you may describe as "Refinancing Offset," you would enter the following:
- As the value of the real estate property, enter zero;
- As the amount of separate property, enter the amount of the refinancing proceeds;
- As the amount of marital equity to be kept by the party who has the separate property, enter 100% (or as the amount of marital equity to be kept by the other party, enter 0%).
This will create a negative entry in the amount of the refinancing proceeds in the "marital property" column and a positive entry in the amount of the refinancing proceeds in the "separate property" column.