how to divided mortgage paymts between divored couples

A couple got legaly divorced in Oct 2007. One spouse made most of the payments for the house. The other spouse non-paying spouse got the house after the divorce. How can the spouse that made the payments toward the house deduct the mortgage interest etc. ? The spouse that ended up with the house is not willing to give an inch. Also how does that effect the income since they were legally married last year and in a community property state New Mexico things are 50/50? Are they supposed to split everything till up to the divorce on the Federal and State return? Thanks for your input Marion

Reply to
Marion1E
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In The Land of Enchantment, community income remains as such until entry of a decree of dissolutionment of marriage or the income is designated as separate by a decree or judgment of a court having jurisdiction or upon separating either of the spouses petitioned district court for an order without filing for disillusionment of marriage. In other words, in NM, just living apart is generally not enough to end the community.

Once you determine when the community ended, income received prior to that date is community and income received after that date is separate.

The mortgage interest expense can be tricky because of 1. the rule that requires the home in question be your main or second home and 2. whether the community ended or not and 3. the existence of court orders.

Assuming that the home in question meets the requirements of being your main home (period in which you lived there) or your second home (period after you vacated) then we only have to deal with number 2 and 3.

If the interest payments were made when the community existed, then the interest was paid out of the community and each spouse gets half the deduction. If the interest payments were made by you after the community ended while you still had an ownership interest and were still liable for the loan payment, then that interest expense is yours. If you made the interest payments after the community ended and after you no longer had an ownership interest because you were ordered to by the court, then those payments may qualify as deductible alimony. Finally, if you made the interest payments after you no longer had an ownership interest and you were not ordered by a court to do so, then no one gets a deduction for those interest payments.

Whew!

Reply to
Alan

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