Dividing Property in Austin: What to Expect Under Texas Law

Dividing property in a divorce can be one of the most stressful and confusing parts of the process. In Texas—particularly in Austin, where property values have skyrocketed in recent years—understanding how courts handle community and separate property is essential. To shed light on this complex topic, we spoke with Chelsi Moore, Senior Attorney at Modern Family Law in Austin, who regularly guides clients through property division in Texas divorces.

Texas Community Property Basics

Texas is a community property state, which means that by default any property owned at the time of divorce is presumed to belong equally to both spouses. However, as Moore explains, many people misunderstand the difference between community and separate property:

“Even many Texans who were born and raised here do not fully understand the difference. A common misconception is that separate property only refers to what someone had before marriage. In reality, it is possible to acquire separate property during the marriage as well,” states attorney Chelsi Moore

For example, inheritances and certain gifts received during marriage may still be considered separate property. But proving something is separate usually requires documentation and, often, expert testimony.

Short-Term Marriages & Reimbursement Claims

In shorter marriages, couples often do not accumulate significant assets. Still, disputes may arise when premarital property is involved.

“If one spouse owns a house before marriage and the other moves in, paying utilities or helping with improvements, questions about reimbursement come up. People sometimes assume they’ll be reimbursed dollar-for-dollar, but that isn’t necessarily how it works,” Moore explains.

Courts typically look at whether contributions actually increased the property’s market value or reduced the principal on a mortgage. Since early mortgage payments mainly cover interest, reimbursement may be minimal in shorter marriages.

The Presumption Of A Gift When Adding A Spouse To A Deed

One of the biggest recent changes in Texas law involves property deeds. If you add your spouse’s name to property you owned before marriage, the law presumes you intended it as a gift. That means it becomes separate property of both spouses rather than community property.

“Because Texas courts cannot divest someone of their separate property, couples may find themselves in civil court as tenants in common, where one spouse may need to buy out the other’s share. It’s a completely different framework than family law,” explains Moore.

This creates major implications for homeowners in Austin, especially with property values doubling in some neighborhoods in recent years.

Dividing Equity In Austin Homes

With Austin’s real estate boom, dividing home equity has become a significant issue in divorces.

Chelsi Moore explains, “I know people whose home values literally doubled in one year. While that’s great for the homeowner, it creates challenges in divorce cases, especially when one spouse wants to buy out the other’s share.” 

Equity is calculated by subtracting mortgage debt from the home’s market value. If one spouse keeps the home, they often must buy out the other spouse’s share. If sold, the court decides how proceeds are divided—sometimes equally, but not always. Texas judges can consider multiple factors to reach a “just and right” division.

Handling Separate Property & Commingling

Texas courts cannot take away separate property, but disputes arise when funds or assets are commingled.

Chelsi describes this: “Think of it like mixing spaghetti noodles with egg noodles—it takes a lot of work to separate them again. That’s where tracing and sometimes forensic accountants come in.” 

For example, interest earned on premarital savings is community property, even if the account itself remains separate.

Fraud On The Community

When one spouse misuses community assets, courts can issue judgments, sometimes tripling the damages proven. However, they still cannot seize the spouse’s separate property to fix the harm. Instead, the wronged spouse receives a judgment collectible after divorce.

Prenuptial & Postnuptial Agreements In Austin

Austin’s tech-driven economy and rising wealth have fueled growing interest in prenuptial and postnuptial agreements.

Moore explains, “Many younger professionals in Austin’s high-paying industries are marrying someone with a much lower income. Prenups define what is separate property and prevent major disputes later.” 

Postnups are also on the rise, often used to protect families from business liabilities or to manage financial risks in new ventures.

Practical Advice: Managing Expectations

Moore emphasizes the importance of practical decision-making:

“Litigation is expensive. I’ve seen people spend more in legal fees than the asset in dispute was worth. My goal is always to help clients avoid spending $40,000 in fees to recover $20,000 in property.”

Final Thoughts

Property division in Austin divorces is rarely straightforward. From booming real estate values to complex stock options and business assets, couples face a wide range of challenges. Working with an experienced attorney and often financial experts is critical to protecting your interests.

At Modern Family Law in Austin, our attorneys guide clients through these difficult issues with expertise and compassion. If you’re facing divorce in Austin and have questions about how property might be divided, reach out for a consultation today.