Itemized Deductions and Mortgage Interest in Divorce

Itemized Deductions: Another common tax question in divorce is which spouse is able to claim the itemized deductions when the divorce is complete.  It is always a good idea to address these issues in the settlement agreement and divorce decree so everyone is clear who will be claiming which deductions.  Also, depending on whether you live in a community property state, the below rules may differ or not apply at all regarding who can claim the particular itemized deduction.

Overall, it is usually safe to claim the deductions that the spouse paid.  If the parties paid the itemized deductions from a joint account, each spouse can claim one half of the deduction.

Property Tax and Mortgage Interest: Real estate taxes and mortgage interest are usually the largest deductions that the family law practitioner should be aware.  Whose name the house is in can sometimes be determinative regarding whether a spouse can take the deduction.  For example, if the house is in the husband’s name only, then only the husband can claim the mortgage interest and property taxes as itemized deductions on the home.  If the home is in the name of both the husband and the wife, then both parties are able to share those itemized deductions.

Further, if a divorce or separation agreement requires one spouse to pay the mortgage interest on a home that is jointly owned, part of the payment of the interest may be considered spousal maintenance.  The divorced spouse who pays the mortgage interest could deduct half the amount as spousal maintenance and the other half as an itemized deduction for home mortgage interest. The other former spouse would have to include half the amount as income from spousal maintenance but may also be able to claim an itemized deduction for half the mortgage interest and real estate taxes.