Tax issues are generally not the paramount concern of couples going through divorce in Georgia. However, failure to recognize and understand the impact divorce may have on Federal Income Tax filings may lead to unsavory results and unnecessary conflict with the IRS. One question that many divorcing or divorce couples often fail to address until the time for filing taxes is fast approaching is: "Who gets to take the mortgage interest deduction?" Like many questions regarding divorce, the answer to this question depends on the circumstances of each individual case. Thus, it is important any individual who has recently finalized their Georgia divorce to seek the advice of a tax expert regarding the effect their Georgia divorce may have on their taxes. In fact, it is advisable to seek both the input of an experienced Georgia divorce attorney as well as a tax expert during the divorce process, to ensure that any Marital Settlement Agreement entered into adequately address how tax matters will be handled during and after the divorce process. Below is some general guidance on how the mortgage interest deduction is handled post-divorce.
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If the home is owned in the name of only one of the former spouses during the marriage, only that spouse may claim the mortgage interest deduction for the payments made during the marriage post-divorce.
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If the home is jointly owned and the mortgage was paid from a joint account during the marriage, the mortgage interest deduction may be split equally between the former spouses for the pre-divorce portion of the year.
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The mortgage interest deduction and deduction for real estate taxes paid for the post-divorce period of the year will be determined by the terms of the final Order of Divorce or Marital Settlement Agreement and the form of ownership following the divorce. Thus, if the home continues to be owned jointly by both former spouses, both former spouses are both entitled to take deductions for half of the mortgage interest and real estate taxes. Conversely, if marital home is transferred to one party solely as part of a settlement, only that ex-spouse may take the mortgage interest deduction.
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If a Marital Settlement Agreement requires one former spouse to pay the mortgage on a home owned jointly by the former spouses, those payments may be considered alimony and deducted as such. For more information regarding situations such as this as well as more specific information on how the mortgage interest deduction should be handled post-divorce see IRS Publication 504, Divorced or Separated Individuals.