taxes

What is the name of your state? AK

probably not a usual question but I was wondering if someone could answer this.

I have been in the process of a divorce for over 2yrs. I have been living in the marital home which I purchased originally but has been deemed marital property. I have been paying the mortgage for the last two years. Now with that said. Most states argue that living in the marital home even though you pay the mortgage it is considered rent to the spouse that
is no longer living there. If that is the case then would it not be correct for the spouse not
living in the home to declare that portion that is being paid for them as earned income? And should I not be filing with the IRS documents to show that they are benefiting for my
continued payments. As when the house is sold they will reap the benefit of reduced mortgage balance and interest paid?

GREG3951 said:

What is the name of your state? AK

probably not a usual question but I was wondering if someone could answer this.

I have been in the process of a divorce for over 2yrs. I have been living in the marital home which I purchased originally but has been deemed marital property. I have been paying the mortgage for the last two years. Now with that said. Most states argue that living in the marital home even though you pay the mortgage it is considered rent to the spouse that
is no longer living there. If that is the case then would it not be correct for the spouse not
living in the home to declare that portion that is being paid for them as earned income? And should I not be filing with the IRS documents to show that they are benefiting for my
continued payments. As when the house is sold they will reap the benefit of reduced mortgage balance and interest paid?

Click to expand...

I am a tax professional.

No, absolutely not. The IRS would absolutely NOT agree that its income to the other spouse and therefore deductible to you.

Its a real estate asset. The equity/appreciation does not become income until the house is sold. As its the marital home, each of you will be entitled to a 250k exclusion on their portion of any gain, and the only tax to be paid would be on any portion in excess of the 250k exclusion.

A judge cannot order her to declare income that is not income until the federal tax code. Even if the judge could, the IRS would disallow you the deduction.

You may be able to get the court (or even your wife) to agree that you are entitled to the equity that has accrued since you separated, therefore giving you a greater share...but that could also work against you, since your actual equity may have declined over the last year due to the housing market.