Tax and Mortgage Deduction for Joint Property

As a divorce lawyer I frequently deal with couples, who own their home jointly, and sometimes one of the parties will decide that the income tax deductions for mortgage interest expense and real estate taxes are assets that should be divided along with the other marital property. Often one will suggest that the deductions should be split evenly
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The people, who raise this point are sometimes correct, that the potential tax savings are valuable; however, frequently by dividing the tax deduction they will destroy the benefit. This is because the total mortgage interest and real estate taxes might be high enough to create a benefit for a spouse, who itemizes her deduction. However, if they split the deduction in half, both of them may end up claiming the standard deduction and the benefit is lost.

In addition the right to claim these tax deduction is not something that can be assigned. The taxpayer must actually pay an expense to take a tax deduction, and if one spouse makes all the mortgage payments, there is no provision in the Internal Revenue Code, which allows the other to claim part of the tax deduction. Furthermore, the taxpayer must have a legal obligation to pay the expense. This can be a factor with property held in tenancy in common rather than joint tenancy, if each spouse is individually liable for one half of the property tax.