The house, the buyout and the equalization payment.

Appraiser or broker opinion: only one of them is an appraisal.

Colorado licenses real estate appraisers, and says who is not one. A licensed broker who gives an opinion of value that is not represented as an appraisal and is not used to obtain financing is not an appraiser (C.R.S. § 12-10-602(9)(b)(II)), and neither is a CPA who does not call an opinion of real estate value an appraisal. A broker’s price opinion or comparative market analysis is lawful, useful and cheap. It is not an appraisal, and in a contested hearing it is weighed as what it is.

Four kinds of opinion, and what each is worth.

Choosing the appraiser, and what it costs.

What to ask before you hire one.

A certified appraiser with divorce and testifying experience, an interior inspection, the statutory date, and a written fee that includes testimony.

Credentials. Certified residential for a house; certified general for two to four units, acreage or mixed use. Get the license number and check it.

Experience. Divorce work and testimony: how many depositions and trials, and whether the appraiser has done retrospective appraisals, which a premarital home needs.

Scope. An interior inspection; a USPAP-compliant report; an intended use stated as dissolution of marriage; and an effective date that matches the statutory valuation date, the decree or the earlier property hearing (C.R.S. § 14-10-113(5)).

The fee. In writing, with the rates for deposition and trial. The report is the cheap part of an appraisal; defending it is the expensive part.

One or two. A joint appraiser costs one fee and is often decisive; it suits an ordinary house in an active market. One each is usual where the gap matters: a high-end, unique or rural property. A review appraisal under USPAP Standard 3, in which a second appraiser tests the first report without appraising the house again, is the economical way to learn whether the other side’s number will survive cross-examination.

A benchmark: what a lender appraisal costs in Colorado.

Condition and deferred maintenance: document it before the inspection.

Appraisers adjust for condition and deferred maintenance; the spouse who documents the problems first usually sets the adjustment.

Appraisers rate condition on the C1–C6 scale of the standard lender forms and adjust for deferred maintenance. Before the inspection, document what the appraiser may not see in an hour: the roof, the furnace and air conditioning, water damage, a failing foundation, work done without permits. Photographs with dates and written contractor bids are the evidence; a spouse’s description at the hearing is not. Unpermitted work is a real issue, both for value and for the lender who will be asked to refinance it. The spouse who is leaving should ask for access to document the same things, because a house described only by the spouse who keeps it tends to be described as needing work.

Costs of sale: net equity only when a sale is real.

When one spouse keeps the house, the other often objects that a commission and closing costs should come off its value, and the spouse keeping it objects to deductions everywhere else. Colorado courts have given the same answer for fifty years: it depends on whether a sale is actually going to happen.

Fifty years of the same answer.

The rule of thumb. A sale that is ordered, listed, or inevitable because the spouse keeping the house cannot carry it supports net equity. “Maybe someday” gets gross equity. The same logic governs tax-affecting the retirement accounts beside it: evidence of an actual withdrawal, or no deduction. A settlement is bound by neither rule, and the balance sheet below shows why both are worth negotiating.

A commission on a sale nobody plans is not a cost. A sale the decree orders is.

The divorce balance sheet: how the payment is set.

Colorado divides marital property in such proportions as the court deems just after considering all relevant factors, including each spouse’s economic circumstances and the desirability of awarding the family home, or the right to live in it for reasonable periods, to the spouse with whom the children live most of the time (C.R.S. § 14-10-113(1)). The division must be just and equitable but need not be equal (In re Marriage of McGinnis, 778 P.2d 281 (Colo. App. 1989)); the court is not expected to value with razor-sharp exactness (Moss v. Moss, 190 Colo. 491, 549 P.2d 404 (1976)); and it looks at economic circumstances as of the hearing (In re Marriage of Wells, 850 P.2d 694 (Colo. 1993)). The balance sheet is how a court, and a settlement, sees the whole estate at once.

Two columns, then half the difference.

Every asset and debt in the column of the spouse who keeps it; the payment is half the difference between the totals.

List every asset and debt once, at its value on the valuation date, in the column of the spouse who will keep it. Total each column. If the totals differ, the spouse with the larger column pays the other half the difference, and both finish with the same net amount. If the court or the parties decide on an unequal division, the same sheet shows exactly how unequal.

What goes on it. Every marital asset and debt at its value on the valuation date. Separate property stays off the sheet except for its marital growth (C.R.S. § 14-10-113(4)); a debt goes in the column of the spouse who will pay it; a retirement account goes in at the share the order will actually transfer.

How the payment moves. In the example below, the wife keeps the house and her own 401(k); the husband keeps his larger 401(k) and the joint brokerage account. At face value her column is $105,000 larger, so she owes him $52,500. Every dollar of appraised value moves the payment by fifty cents: had the house appraised at $875,000 instead of $850,000, her column would rise by $25,000 and her payment by $12,500. That is why the appraisal fight is worth having, and why it is worth only half of what it looks like.

Worked: the balance sheet at face value.

The same balance sheet, after tax.

Face value counts a pre-tax 401(k) dollar, a dollar of home equity and a dollar of low-basis stock as the same dollar. They are not. The second version values each 401(k) at 25 percent below face, an assumed combined federal and Colorado rate on withdrawals, and takes 19.4 percent (15 percent federal capital-gains tax plus Colorado’s 4.4 percent) of the brokerage account’s $80,000 built-in gain. The house is left at its equity: no sale is planned.

Worked: the balance sheet, tax-affected.

Match the currency of the payment. If W pays the $85,260 out of her 401(k) rather than in cash, she must transfer $113,680 of pre-tax dollars to deliver $85,260 of value at 25 percent. A payment made in one currency and credited in another is the most common mistake on these sheets. The retirement transfer itself is made by a qualified domestic relations order; see QDROs & Dividing Retirement Plans.

One estate, four payments.

Interactive balance sheet: below

The buyout, step by step: refinance, deed, deadlines.

A buyout is a small real estate closing with a divorce decree attached. It fails in the same places every time, and each failure has a sentence in the agreement that prevents it.

1. Before signing
   Pre-qualify the refinance.

   The decree binds the spouses, not the lender. Until the loan is refinanced both spouses remain liable on it, and a late payment lands on both credit reports. The spouse keeping the house gets a lender’s pre-qualification before the agreement is signed, not after.

2. The agreement
   A deadline, a fallback, and who pays meanwhile.

   A date by which the refinance must close; if it is missed, a listing by a stated date with a price-reduction schedule and a named listing agent; who pays the mortgage, taxes and insurance until then; and an indemnity for the departing spouse.

3. The payment
   Interest and security.

   The court has discretion to award interest on equity paid over time (In re Marriage of Lucas, 631 P.2d 1175 (Colo. App. 1981); In re Marriage of Garcia, 638 P.2d 848 (Colo. App. 1981)). Whether an unsecured promise in a decree creates a lien depends on the facts; the Supreme Court found an equitable lien on the facts of Leyden v. Citicorp Industrial Bank, 782 P.2d 6 (Colo. 1989). A deferred payment is secured by a recorded deed of trust instead.

4. At funding
   The deed, recorded.

   A quitclaim or special warranty deed is delivered when the refinance funds, and recorded; the documentary fee is one cent per $100 of consideration (C.R.S. § 39-13-102). The divorce severs a joint tenancy between the former spouses into a tenancy in common (C.R.S. § 15-11-804(2)(b)), but a good-faith buyer or lender relying on the survivorship title is protected until a writing declaring the severance is recorded (C.R.S. § 15-11-804(3)).

5. The tax
   No tax on the buyout; the gain stays with the house.

   The transfer is tax-free under § 1041, and the spouse keeping the house adds the other spouse’s adjusted basis in the half-share (Pub. 523). Debt incurred to buy out a spouse’s interest in a divorce can be treated as home-acquisition debt, within the $750,000 limit (Pub. 936). A later sale gets $250,000 as a single filer; ownership tacks, but the use test is the keeper’s own.

6. If the house stays jointly owned
   Grant use in the decree.

   A deferred sale keeps the absent spouse’s exclusion alive only if the decree grants the occupying spouse use of the house (§ 121(d)(3)(B)). The possession date, the repairs and the carrying costs go in the same paragraph.

7. After closing
   The property-tax exemption.

   For an owner 65 or older, Colorado’s senior exemption covers 50 percent of the first $200,000 of actual value after ten years of ownership and occupancy. The spouse of an owner of record who occupies the home counts as an owner-occupier, which may let the keeping spouse count the married years, and a change of ownership needs a timely application (C.R.S. § 39-3-203). Confirm the answer with the county assessor before the deed is recorded.

8. For five years
   Nothing left off the sheet.

   An asset omitted from the disclosures or misstated can be reallocated for five years after the decree under C.R.C.P. 16.2(e)(10). The balance sheet is complete, or it is reopened.

If the refinance fails, and the § 121 clock.

When the refinance fails.

The lender enforces the note against both spouses until it is refinanced; the fallback in the decree is the departing spouse’s protection, and the tax exclusion is on a clock.

What happens. The keeping spouse cannot qualify, rates move, or the deadline simply passes. The lender is not a party to the decree and keeps both names on the note. Without a fallback, the departing spouse’s tool is an enforcement motion asking the court to order a sale. With one, the listing date, the price reductions and the named agent take effect on their own terms, and the decree already says who signs.

The tax clock. A spouse who moved out and is waiting to be paid is also watching a tax clock. The use test looks back five years from the sale, so a spouse who lived in the house at least two years keeps the $250,000 exclusion for about three years after leaving; after that, unless the decree granted the other spouse use, it is gone. In the worked example on Divorce & Taxes, a husband who moved out in August 2024 and sells his half in October 2029, under a decree silent on use, is taxed on $287,000 of gain instead of $37,000. The two spouses’ combined tax is $71,576 against $14,356 with the sentence.

Five things people get wrong about the house.

What to bring, and what to decide first.

What people ask about keeping the house.

Related: Real Estate  ·  Property Division  ·  Divorce & Taxes  ·  QDROs & Retirement Plans  ·  Enforcement & Contempt