Home equity in a divorce is determined by finding the home’s fair market value and subtracting the outstanding mortgage balance and any other debts secured by the property. For example, if a home is worth $400,000 and the remaining mortgage balance is $250,000, the property has approximately $150,000 in equity. However, determining how much equity exists is different from deciding how that equity will be divided between spouses.
In South Carolina, divorce property division follows a legal process called equitable apportionment. This means marital assets are divided fairly based on several factors, rather than automatically being split 50/50. Because a home is often one of the largest assets in a marriage, having an accurate appraisal can make a significant difference during divorce negotiations, mediation, or court proceedings.
For homeowners in Orangeburg County, Santee, Lake Marion, and surrounding South Carolina communities, understanding home equity is an important step before deciding whether to sell the property or allow one spouse to keep it.
Home equity is the portion of a property’s value that remains after subtracting the outstanding mortgage debt and other applicable liens.
As homeowners pay down their mortgage, they generally build equity. Equity may also increase when the property’s market value rises.
However, home equity can decrease if property values decline or if additional debt is secured against the house.
The basic formula is:
For example, a couple may have purchased a home years ago for $250,000. Today, the home may be worth $400,000, and they may owe only $250,000.
That means they have $150,000 in home equity.
The original purchase price is not the most important number when calculating current equity. What matters is the property’s supported value and the debt remaining against it.
Determining home equity usually involves three steps.
Step 1: Determine the Home’s Market Value
The first step is determining what the house is worth.
A professional home appraisal provides an independent opinion of value based on the property’s characteristics, condition, location, and comparable sales.
An appraiser may consider:
The appraisal establishes the real estate value used in the equity calculation.
For divorce purposes, the correct valuation date should be confirmed with the attorney. Depending on the circumstances, the value needed for equitable distribution may differ from today’s market value.
Step 2: Determine the Outstanding Mortgage Debt
Next, determine how much money is still owed against the home.
This may include:
It is important to use the actual outstanding balances rather than the original loan amounts.
The monthly mortgage payment is not the same as the mortgage balance. Homeowners should request an appropriate mortgage statement or payoff information from their lender.
Step 3: Subtract the Debt From the Home’s Value
Once the property value and debt balances are known, the equity can be calculated.
Consider this example:
Description | Amount |
Appraised home value | $400,000 |
Remaining mortgage | $240,000 |
Home equity loan | $10,000 |
Total home equity | $150,000 |
In this example, the home has $150,000 in equity before potential sale expenses or other settlement considerations.
If the spouses agreed to divide that equity equally, each spouse’s starting share would be $75,000.
However, that is only an example. The final division depends on the applicable legal factors and divorce settlement.
Not automatically.
South Carolina is an equitable distribution state. Under South Carolina Code Section 20-3-620, the Family Court considers multiple factors when dividing marital property.
These factors include:
Contributions are not limited to income. South Carolina law also recognizes contributions made through homemaking and the preservation or appreciation of marital property.
This means one spouse does not automatically receive more equity simply because they earned a higher salary or made the mortgage payments.
An appraisal helps establish the value, but the spouses, attorneys, mediator, or court determine how marital equity will be divided.
When one spouse wants to keep the marital home, the equity calculation becomes particularly important.
The spouse keeping the property may need to compensate the other spouse for their agreed or court-determined share of the equity.
This is commonly called a home equity buyout.
For example, suppose:
In that situation, the spouse keeping the home might need to compensate the other spouse $75,000.
But the buyout may not necessarily require a direct cash payment.
Depending on the settlement, one spouse may receive other marital assets in exchange for giving up their interest in the home.
The spouse keeping the property must also consider whether they can afford the mortgage, taxes, insurance, maintenance, and any necessary refinancing.
Importantly, removing someone’s name from the deed does not automatically remove their responsibility for a mortgage. The lender must separately release that obligation, potentially through refinancing or an approved loan assumption.
Sometimes neither spouse wants to keep the home, or neither can afford to maintain it independently.
In that situation, selling may be an option.
When a home is sold, the actual amount available for distribution is generally different from the property’s gross equity because transaction expenses must also be considered.
These may include:
For example, a home may have $150,000 in equity, but the amount remaining after selling expenses could be lower.
This is why spouses should distinguish between home equity and net sale proceeds.
An appraisal provides the real estate value, while closing calculations and settlement negotiations determine what money may ultimately be available.
The home value is the starting point for the entire equity calculation.
If the value is inaccurate, the calculated equity will also be inaccurate.
Consider a property with a $200,000 mortgage balance.
One spouse believes the home is worth $300,000. The other believes it is worth $350,000.
That creates two very different equity calculations:
Estimated value | Mortgage | Equity |
$300,000 | $200,000 | $100,000 |
$350,000 | $200,000 | $150,000 |
The $50,000 difference in estimated value creates a $50,000 difference in calculated equity.
Under a hypothetical equal division, that difference would change each spouse’s calculated share by $25,000.
This is why disagreements about home value can significantly affect divorce negotiations.
A professional appraisal helps replace competing estimates with a value opinion supported by local market evidence.
Online estimates can provide a rough idea of home value, but they may not be reliable enough for important divorce decisions.
Online valuation tools may not know:
For an ordinary home in a neighborhood with many similar sales, an automated estimate may sometimes be reasonably close.
For unique residential properties, rural homes, lakefront houses, or homes requiring significant repairs, the difference may be much greater.
A professional appraisal considers the specific property and relevant market evidence.
Not every dollar of home equity is necessarily marital property.
For example, one spouse may have purchased the house before the marriage. Another situation may involve a home received through inheritance or as a gift.
South Carolina law distinguishes between marital and nonmarital property.
However, ownership can become complicated when marital funds are used to pay a mortgage, improve the property, or when the spouses change how the property is titled.
Whether some or all of the equity is marital property is a legal determination.
An appraisal can help establish the property’s value, including a historical value when necessary, but an attorney must determine how that value applies to the divorce.
Yes. Property values and mortgage balances can change while a divorce is pending.
In South Carolina, the date marital litigation begins is generally important to identifying and valuing marital property. Under certain circumstances, later appreciation or depreciation may also be considered.
For example, a home’s market value may increase between the filing of the divorce and the final hearing. Mortgage payments may also reduce the loan balance during that time.
Those changes can create questions about which figures should be used.
The appropriate valuation date and debt balances should be discussed with the divorce attorney before the appraisal and final equity calculation.
A retrospective appraisal may be needed when the valuation must reflect an earlier date.
Before divorce mediation or settlement discussions, gathering a few documents can make the process easier.
Helpful records include:
A professional appraiser generally focuses on the property’s value. Attorneys and financial professionals use that value alongside loan balances and other information to address equity division.
Q: How do you calculate home equity in a divorce?
Home equity is generally calculated by subtracting the outstanding mortgage balance and other applicable property liens from the home’s market value. For example, a $400,000 home with $250,000 in secured debt has approximately $150,000 in equity.
Q: Is home equity always split 50/50 in South Carolina?
No. South Carolina follows equitable apportionment, meaning marital property is divided fairly based on the circumstances. An equal division is possible, but it is not automatically required.
Q: Do I need an appraisal to determine home equity?
A professional appraisal is often helpful during divorce because it provides an independent, market-supported property value. The appraisal can help with buyouts, mediation, settlement discussions, or disputed property values.
Q: What if one spouse wants to keep the house?
The home value and mortgage balances can be used to calculate equity. The spouses may then negotiate a buyout or another arrangement involving marital assets. The final terms depend on the settlement or court order.
Q: Does a divorce appraisal determine how much each spouse receives?
No. An appraisal determines property value. The attorneys, spouses, mediator, or court determine how that value and the associated debt are handled during property division.
Home equity can represent a significant portion of a couple’s marital assets. Before agreeing to a buyout, selling the home, or negotiating a divorce settlement, it is important to understand what the property is worth.
An inaccurate property value can affect the equity calculation and create unnecessary disagreements.
Carolina Appraisal Group helps homeowners, attorneys, and property owners in Orangeburg County, Lake Marion, Santee, and surrounding South Carolina communities with residential and divorce-related property appraisals.
Whether one spouse plans to keep the home or both are considering selling, a professional appraisal can provide a clearer understanding of the property’s value and help support informed divorce settlement decisions.
Disclaimer:
All information provided on this website is for general informational purposes only and does not constitute legal, financial, or professional advice. Carolina Appraisal Group does not guarantee the accuracy, completeness, or reliability of any information provided. Appraisals and valuations are subject to change based on market conditions and specific property factors. Clients should consult with one of our qualified professionals before making decisions based on the information provided herein.Use of this website and submission of information does not establish a client relationship. All services are subject to formal engagement agreements and compliance with applicable federal, state, and local laws.
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