Can she deduct the money invested into the property from the value of the home to reduce a settlement fee paid to me, or am I entitled to ½?

Your question involves one of the more involved areas of family law - including mathematical analysis - when determining a spouse's interest in a piece of real property acquired prior to the marriage. Your wife would be able to claim her separate property down payment and any resulting equity between the time of purchase and title transfer to both names. Your wife could also have a greater interest in?today's equity if proven that her separate property inheritance improvements to the property resulted in an increase in the property's fair market value. Unfortunately, your money during your marriage would be community property - just as the property is generally considered community property after transferring title into both parties' names. Your use of that community property money would not impact your share of the equity.

These are ultimately issues which will be decided in court. They get technical and can require tracing which would require getting bank records.

She is entitled to get her separate property inheritance out of the house but she has to trace the money used for downpayment and improvements. This is a dollar for dollar reimbursement without interest or appreciation.