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Family Law Software can calculate child support guideline amounts in 21 states.

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Question: Can a party who does not live in the marital residence claim the mortgage deduction for it?

Answer: In general, a party must live in a residence in order to claim the mortgage deduction for it.

For more information, see IRS publications 504 and 936. In Publication 936, search for the definition of "qualified home."

An exception may apply if the title is in joint names and the payer is obligated to pay the mortgage.

Under the tax law, if a property is owned jointly, and the party who pays is obligated to do so, and the payment ceases with the death of the recipient, then any mortgage payment above 50% of the payment counts as an spousal support deduction to the payer and spousal support income to the other party.

The parties must otherwise qualify for spousal support payments between them. For example, this rule will not apply if they live in the same house when the payment is made, or the payment obligation does not cease upon the death of the recipient.

Also, the mortgage interest must be deducted 50% by each party, regardless of who pays the interest.

To take an example, suppose the property is titled jointly and Party A pays 100% of the mortgage, pursuant to an obligation to do so. Half the mortgage payment (100% - 50%) would count as an spousal support deduction to him and spousal support income to Party B or ex-spouse.

Also, Party A would claim half of the interest payment, and Party B would claim the other half.

To Party B, who did not actually make a payment, there would be taxable spousal support income, partially offset by a tax deduction of the mortgage interest.

The mortgage payer (Party A in our example) will usually be better off than before, because of the spousal support deduction.

The party who did not actually pay the mortgage (Party B in our example) will end up worse off, because of the spousal support income.

Under the law, this rule would apply in many cases where parties are getting divorced but still own the home in joint title. However, in practice, this rule is largely ignored. In practice, most of the time, the person who pays the mortgage simply claims the deduction.

The software gives you the option to do it either way. If you click "more info" on the real estate asset, and scroll to the place where you are entering mortgage information, then you can click "more info" again.

At the top of that page, you will see a checkbox to "have the mortgage interest for this property deductible per joint title."

Check this box if the real estate property is held in joint title, and the exception described above applies, and you wish to have the letter of the law apply.


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