I have a friend getting divorced who thinks that his consumer credit score will deteriorate unless he maintains at least 50% ownership of equity in a home after divorce. He intends to continue paying the mortgage on the home and claiming the mortgage interest deduction, which apparently he can legally do even if he owns 1% of the equity.
He wants to gift the home to the ex-wife after the mortgage is paid in full, but of course that is a tax disaster, since after 10+ years the gift of his equity in the home would be a gift to the wife and probably taxable as ordinary income. If he gifts the equity (or much of it) now then she gets that tax free at the time of divorce.
To the extent that he gifts home equity at the time of divorce and maintains a 10% equity ownership in the home and his name on the mortgage, wouldn't he still get a similar credit score just by virtue of his owning a home and having a successful payment history on the existing mortgage? I'm trying to understand if there isn't a way for them to both get what they want here: the wife wants the equity with minimum tax impact, and the husband wants to maintain his credit rating tied to his being a home owner.