Suppose Party A made an initial down payment of $70,000, and the home is about to be sold.
In the sale, the parties want it to come out that Party A would take out $70,000 more than Party B.
Responsibility for the mortgage, however, is being shared 50-50.
What you can do is to create two real estate properties, one for each spouse.
In assigning the values of the two properties, give Party A’s home 50% plus $35,000. Give Party B’s home 50% minus $35,000.
Give each property half the mortgage. Specify that each spouse will be paying the mortgage on their property.
Indicate that both homes will be sold.
For the cost of the home (tax basis) for Party B, take the original cost, subtract Party A’s down payment of $70,000, and gave Party B half of the remainder.
For the cost of the home (tax basis) for Party A, use the original cost (total basis) minus what we give Party B.
Then Party A’s down payment will be reflected in an increased tax basis, and Party A will take an extra amount equal to the down payment out of the proceeds.