Third party ownership
This FAQ explains what to do when a third party owns a portion of an asset. This typically can apply with real estate, where, for example, a party’s parents own a portion of the property. It can also apply with a business, where, for example, there are partners who own a portion of the business. […]
Why are the mortgage (and other expenses) not showing up on the financial affidavit or Budget Report?
Most likely, the reason is that the property has been indicated to be a rental income property. You can see that on the more info screen for real estate, in the section for rental income property. The property can be entirely rental property, in which case the mortgage is subtracted from the rental income of […]
How do I enter responsibility for the mortgage shifting from one party to the other?
Here is how to specify that Party A is taking the mortgage over from Party B after, for example, four years: 1. Set Party B as initially paying the mortgage. 2. On the “more info” screen for the mortgage, specify that Party B will make a balloon payment in the amount of the balance at […]
How can I more precisely account for the tax on sale of real estate?
The Sale of Real Estate Report shows an estimated tax amount. But this is only a rough estimate, made by applying a marginal capital gains tax rate to the taxable gain. It will not reflect a situation where the gain causes a change in tax bracket, or the impact of the alternative minimum tax, or […]
How do I enter rent for a party who is paying rent?
You can enter it where you enter expenses. There will be a Real Estate section, and you will see a button to enter “Tenant expenses.”
Can a party who does not live in the marital residence claim the mortgage deduction for it?
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 […]
What does the software use as the price at which a real estate property will be sold in the future?
A real estate property is sold for a price equal to the property’s value in the year of sale. The software automatically calculates this value. It does this by starting with the current value and increasing that value each year by inflation, or by another rate of appreciation if you have entered it. You enter […]
What if part of the home was rented before sale?
If the couple did not live in the rented part for 2 of the 5 years before the sale, treat the sale as if it were the sale of two properties. Enter one as a rental property, and enter the other as a personal property. Divide the value and mortgage proportionately between the two properties. […]
How do I handle depreciation recapture?
If a real estate property was rented or used for business, and then is sold, there may be depreciation recapture on the rented portion. Depreciation recapture provides that some of the gain on a sale of real estate is ordinary income. It applies if a method other than straight line was used to depreciate the […]
What if a refinancing is buying out separate property?
All refinancing proceeds are treated as marital property. Therefore, if the refinancing will buy out separate property, then you will need to create a second real estate property to reduce the marital property balance and increase the separate property balance. In that second real estate property, which you may describe as “Refinancing Offset,” you would […]