Kentucky Dissolution of Marriage With a House — Your Options (2026)

Real estate purchased during the marriage is marital property subject to equitable distribution. In most agreed cases, the parties choose between one spouse buying out the other, selling the home, or deferring a sale.

Is the Home Marital or Non-Marital Property?

Purchased during the marriage with marital funds: Marital property — subject to equitable distribution.

Owned before the marriage: Non-marital property of the original owner. However:

• Mortgage payments made from marital income during the marriage may give the marriage a marital interest in the equity built during the marriage
• Document pre-marital equity carefully

Gifted or inherited during the marriage: Non-marital property.

Option 1 — One Spouse Keeps the Home

Separation Agreement must include:

• Full legal description of the property
• Agreed value (professional appraisal or agreed estimate)
• Equity calculation: value − mortgage payoff = net equity
• Division of net equity (typically 50/50 unless negotiated otherwise)
• Buyout: keeping spouse pays the other their share (cash, refinancing proceeds, or offset against other marital property)
• Mandatory refinancing deadline — the keeping spouse must refinance the mortgage into their name only within a specified period after the Decree
• Fallback: if refinancing fails, home is sold and proceeds split
• Who pays mortgage, taxes, insurance, HOA, and maintenance during the transition period
• Deed transfer: After refinancing, grantor spouse signs a Quit Claim Deed to the keeping spouse

Deed Recording Process

1. Prepare the Quit Claim Deed (or General Warranty Deed)
2. Grantor spouse signs and acknowledges before a notary
3. Record at the County Clerk's office in the county where the property is located
4. Pay recording fee ($13–$40)
5. Kentucky does not impose a documentary transfer tax on deeds incident to dissolution

Option 2 — Sell and Split Proceeds

Separation Agreement must include:

• Each spouse's percentage of net proceeds (typically 50/50)
• Listing timeline and agent selection process
• Who pays carrying costs (mortgage, taxes, insurance, HOA) during the listing period
• Whether one spouse occupies the home and whether rent compensation applies
• Price reduction schedule
• What happens if one party refuses to cooperate with the sale

Option 3 — Deferred Sale

Often used when minor children are in the home and the custodial parent needs stability. The home remains jointly owned temporarily.

Separation Agreement must include:

• Duration of deferral (specific date or condition — e.g., youngest child turns 18)
• Who occupies the home and who pays all carrying costs
• Compensation to the non-occupying spouse (rent equivalent or equity accrual)
• Capital improvement authorization and cost-sharing
• Final sale process and proceeds split
• Refinancing obligation at sale

Pre-Marital Home — Tracing Non-Marital Interest

If one spouse owned the home before the marriage:

• The pre-marital equity is non-marital property
• Mortgage principal paid down from marital income during the marriage is marital property
• Appreciation: Kentucky courts may consider appreciation attributable to marital contributions as marital property
• Document the pre-marital equity (original mortgage balance at marriage) to support the non-marital interest claim

In the Separation Agreement, expressly state the non-marital interest and the marital interest separately.

Last reviewed: March 2026 | County Clerk for deed recording | No transfer tax for dissolution deeds | Quit Claim Deed after refinancing | Separation Agreement must address all real estate

Last reviewed: March 2026 · Verify current fees and forms with your local court before filing.