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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11157
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Going through a divorce and I have agreed to pay the house

Customer Question

Going through a divorce and I have agreed to pay the house interest and house property tax in advance to her as part of the agreement, but I want it stipulated in the agreement that those are to be my tax deductions and not hers. Is this okay?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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There are really two separate issues here; (1) stipulation in a state court agreement, and (2) Federal tx law.

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The stipulation will not hurt in any way, and from a family law perspective, will certainly insulate, codify, your contribution.

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Your abililty TO take the deductions will depend completely on Federal tax law, which pre-empts any state court decision or direction (although sometimes the law does use state law as it's basis)

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For the Mortgage interest and property taxes it's a little of both:

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The deduction for home mortgage interest and real estate taxes for the post-divorce period of the year will be determined by (1) the terms of the judgment or settlement agreement and (2) the form of ownership following the divorce.

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If the home continues to be held in some form of joint ownership, either as tenants in common or joint tenancy, you and your spouse are both entitled to take deductions for half of the mortgage interest and real estate taxes, and in this scenario CAN have it stipulated ... but it's the fact that you both own that ALLOWS for the federal tax deduction, not the stipulation ... the stipulation, again however, will clarify.

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However, if the entire interest in the marital residence is transferred to one party as part of the settlement, only that person can take the mortgage interest deduction.

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Hope that helps

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Let me know if you have questions

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Lane

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