She has the house, I have the mortgage

[DLB]

What is the name of your state (only U.S. law)? MN

She got the house in the divorce, but the mortgage is still in my name. She has to attempt to refinance every year and has to make the payments in a "timely fashion", but until then, the loan stays in my name. My question is this: Who gets to claim the mortgage interest paid? I realize in fairness that it should be her because she is the one making the payments, but doesn't my bank report the mortgage interest paid to the IRS under my name? Can she even claim the mortgage interest sine it is reported under my name?

 

[mistoffolees]

What is the name of your state (only U.S. law)? MN

She got the house in the divorce, but the mortgage is still in my name. She has to attempt to refinance every year and has to make the payments in a "timely fashion", but until then, the loan stays in my name. My question is this: Who gets to claim the mortgage interest paid? I realize in fairness that it should be her because she is the one making the payments, but doesn't my bank report the mortgage interest paid to the IRS under my name? Can she even claim the mortgage interest sine it is reported under my name?

In all likelihood, neither of you can claim the deduction:
Publication 936 (2009), Home Mortgage Interest Deduction

You can deduct home mortgage interest if all the following conditions are met.
1. You file Form 1040 and itemize deductions on Schedule A (Form 1040).
2. You are legally liable for the loan.
3. There is a true debtor-creditor relationship between you and the lender.
4. The mortgage is a secured debt on a qualified home in which you have an ownership interest. “Secured debt” and “qualified home” are explained later.

You appear to fail test #4 and she fails test #2 and 3. There may be some fine print that covers your situation, so read the entire document (I just read the section I copied above) to see if there are exceptions. You might also want to contact your tax advisor.

Addendum: You said 'she got the house'. In giving the above advice, I am assuming that you have no financial interest in the house. If your divorce decree says that you are entitled to some of the equity, then that might meet #4. Also, read the rules for 'qualified home' carefully. Let's say your name is still on the deed, but the court awarded her 100% ownership of the house. I don't have any way of knowing whether that would pass test #4 or not, so read the docs carefully or ask your tax advisor.

 

[LdiJ]

In all likelihood, neither of you can claim the deduction:
Publication 936 (2009), Home Mortgage Interest Deduction

You can deduct home mortgage interest if all the following conditions are met.
1. You file Form 1040 and itemize deductions on Schedule A (Form 1040).
2. You are legally liable for the loan.
3. There is a true debtor-creditor relationship between you and the lender.
4. The mortgage is a secured debt on a qualified home in which you have an ownership interest. “Secured debt” and “qualified home” are explained later.

You appear to fail test #4 and she fails test #2 and 3. There may be some fine print that covers your situation, so read the entire document (I just read the section I copied above) to see if there are exceptions. You might also want to contact your tax advisor.

Addendum: You said 'she got the house'. In giving the above advice, I am assuming that you have no financial interest in the house. If your divorce decree says that you are entitled to some of the equity, then that might meet #4. Also, read the rules for 'qualified home' carefully. Let's say your name is still on the deed, but the court awarded her 100% ownership of the house. I don't have any way of knowing whether that would pass test #4 or not, so read the docs carefully or ask your tax advisor.

I am going to disagree with that a bit.

He stated that his name was still on the mortgage, he did NOT state that his name was the only name on the mortgage or deed...and if it was, then why the heck did he agree to that "deal"?

If she is on the mortgage and deed, AND she is paying the mortgage payments, then she is perfectly entitled to claim the mortgage interest and property taxes...because

1) she is legally liable for them, and

2) she is paying them.

If she is on the deed, but not on the mortgage, then she can claim the property taxes, for the same reason.

If she is not on the mortgage or deed, then it gets more complicated, and you could be right, its possible that neither of them could claim them because neither of them are both legally liable AND have made the payments.

However its also possible that a well crafted property settlement could have made him her mortgage holder, which would again have allowed her to claim the interest and property taxes, albiet with some reporting requirements on his part as well.