This formula applies to situations where community property is used to pay down the principle on a home that was the separate property of one spouse. This can happen when a spouse purchases a home prior to marriage, but still owes on the home, or inherits a property that still has a mortgage that is paid down during the marriage. Such application prevents the spouse who uses community funds to pay for a separate property asset, which would belong only to them upon divorce, from gaining an unfair advantage when dividing the assets during a dissolution. There are no reimbursement rights for the portion of the payments that represent interest, taxes and insurance. The appreciation and reduction of principle are also used in this calculation. The formula is complicated, so if this type of situation applies to your case, you should consult an attorney to make sure this is performed properly.