The husband in a divorce makes the claim that he doesn't want to give up more than 50% of home equity in a divorce because it will prevent him from answering that he "owns" his home on credit applications, and he thinks this will hurt his ability to get credit (possibly to buy another home in the future). He proposes to split equity in the home 50/50 but he will cover the monthly mortgage expense. Does anyone see this from his point of view and can you elaborate?
Isn't the ability to get credit more dependent on the amount of the mortgage for the part he owns, together with any alimony he owes, relative to his income? Why would a bank even care if he had any equity at all? And if he owned 50% would that be sufficient to answer that he "owned" the home? Technically even if he owns 50% of the equity, if he doesn't live there he cannot answer that he "owns" the home anyway...?
Assuming that there were no significant upside to be realized on the home equity in the future, from a tax standpoint alone wouldn't it be better to pay the wife 100% of the mortgage as alimony, taking the tax deduction, and not taking the home mortgage interest deduction? If you own 50% of the equity, and you take the home mortgage interest deduction for half the mortgage, you lose the same cash flow but only get back part of the payment as a deduction?
The husband in this case doesn't seem to understand that by paying the mortgage directly on the wife's share of the mortgage that he doesn't get any deduction on the home mortgage interest for the part he doesn't own. He'll end up losing cash flow, getting no deductions at all, on that part?
When people get angry at each other, it's hard to get them to think about how to do things efficiently.
nish