In the eyes of the IRS, the year you get divorced is the same as a year you were never married. The IRS will determine your yearly martial status based on your status on the last day of the year. If the government considers you divorced for the tax year, how you divide up tax deductions depends on the divorce agreement and who ends up paying for the house.
Claiming mortgage interest can be somewhat tricky in the event of a divorce. Generally speaking, the spouse who directly made the payments on the mortgage will be allowed to itemize the deduction on their upcoming tax return.
In divorce, tax write-offs are a marital asset just like a house or an investment account. As part of the breakup, you and your ex have to decide how to divide the mortgage-interest deduction paid for the pre-divorce part of the year. It doesn't matter who wrote the check: you can split the deduction evenly or give it to one person. If you both claim the full write-off by mistake, the IRS will have questions, so be very clear who got custody of the deduction.
Dividing up the deduction for the period after you split depends on how you divide up the house. Ownership is a basic requirement for claiming the mortgage-interest write-off. If one of you takes full title to the house, she's normally the only one who can claim the deduction. If you keep the house and own it as tenants in common, you can each deduct mortgage interest, but only up to a point. If you own 40 percent of the house, for instance, you get 40 percent of the write-off.
In some cases, depending on who keeps the house, who makes the house payments and the terms of your divorce agreement, you can also claim some or all of the house payments as alimony. For example, if your ex owns the house after the divorce but you are ordered as part of the divorce agreement to continue to make the payments, you can write off 100 percent as alimony. Your ex reports the alimony as income, but in this case she – as the owner of the home – gets to write off the mortgage interest.
Claiming Mortgage Interest
Neither of you can write off any mortgage interest, pre- or post-breakup, unless you itemize deductions on Schedule A. The deduction for alimony is easier to claim. You write it off on your 1040, as part of figuring out your adjusted gross income. This only works if you're paying the mortgage as part of the divorce agreement. If you're just helping out informally, you can't claim an alimony deduction.
- Internal Revenue Service: Divorced or Separated Individuals
- Bankrate: Alimony Tips Affect Both Parties' Taxes
- IRS: Home Mortgage Interest Deduction
- IRS. "Changes to Deduction for Certain Alimony Payments Effective in 2019." Accessed Oct. 17, 2020.
- United States Congress. "The Tax Cuts and Jobs Act of 2017." Page 36. Accessed Oct. 17, 2020.
- IRS. "Topic No. 452 Alimony and Separate Maintenance." Accessed Oct. 17, 2020.
- IRS. "Publication 504 Divorced or Separated Individuals." Page 13. Accessed Oct. 17, 2020.
- IRS. "Publication 504 Divorced or Separated Individuals." Page 15. Accessed Oct. 17, 2020.
- IRS. "2019 Schedule 1: Additional Income and Adjustments to Income." Accessed Oct. 17, 2020.
- IRS. "Publication 504 Divorced or Separated Individuals." Pages 16-17. Accessed Oct. 17, 2020.
- Commonwealth of Massachusetts. "Learn About the Types of Alimony." Accessed Oct. 17, 2020.
A Durham, NC resident, Fraser has written about law, starting a business, balancing your budget and fighting evictions, among other legal and financial topics.