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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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My wife and I own a house that is currently for sale. Our

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My wife and I own a house that is currently for sale. Our divorce is final next month and we've agreed on a %split of the proceeds. Would we be able to use the same % split to claim the real estate taxes and mortgage interest as we'll be filing separately next year?
Submitted: 11 months ago.
Category: Tax
Expert:  Lev replied 11 months ago.

Lev :

Hi and welcome to our site!
If you own a property jointly - that is up to you how to divide deductible expenses.

Lev :

Yes - you may negotiate who will own assets after separation or divorce. That includes taking your name off the deed and transferring the deed to your spouse only.
See for reference - http://www.irs.gov/pub/irs-pdf/p504.pdf
page 18
Generally, there is no recognized gain or loss on the transfer of property between spouses, or between former spouses if the transfer is because of a divorce.
and - page 19


Generally, no gain or loss is recognized on a transfer of property from you to (or in trust for the benefit of):
Your spouse, or
Your former spouse, but only if the transfer is incident to your divorce.
This rule applies even if the transfer was in exchange for cash, the release of marital rights, the assumption of liabilities, or other consideration.

Lev :

Thus - if you agreed on how to split the real estate taxes and mortgage interest - you may use that proportion - it might be the same as you agreed on a split of the proceeds or different - as long as you both agreed.

Customer:

Hi - thanks for the quick response - so the IRS will allow us both to deduct interest expense and taxes on the same residence? We're hoping it sells before the end of the year, but no guarantee of course...

Lev :

Yes - that is correct - if interest expenses and real estate taxes on the same residence are paid by you and your spouse (or ex-spouse) or paid from community funds - these deductions are divided between co-owners.

Lev :

The issue might be if for instance form 1098 is issued to your name only - then your spouse must attach a note with explanations. Generally - you spouses who file separate tax returns - each deducts expenses he/she actually paid, but if paid from jointly owned funds - deductions are divided equally. However - based on your circumstances - yo might agree to different proportion.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22704
Experience: Taxes, Immigration, Labor Relations
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