There are numerous issues an individual has to consider when they are getting a divorce. Two very important issues are alimony and mortgage payments.
These two financial issues can impact both the payer and the recipient on a daily basis and on a yearly basis, when they file their income taxes. If an individual has any questions or concerns regarding alimony and mortgage payments, they should consult with an attorney for information on the laws of their state.
Alimony, or spousal support, is payments that are made by one spouse to another spouse once their divorce has been finalized. A court will typically award alimony in cases when there is a significant difference in the earning power between the spouses, especially in a long-term marriage.
The court will evaluate the requesting spouse’s financial needs and the other spouse’s ability to provide support. The goal of alimony is to balance the financial resources of the divorcing couple in order to ensure fairness.
It is important to be aware that an individual is not automatically entitled to alimony and it is not awarded in every case. In some cases, the court may grant temporary spousal support while the divorce is pending.
In divorce cases, handing the partition of property is a very important issue. Determining what should be done with a family home may create many difficulties.
Every state has regulations governing property and divorce that may vary widely. This can make it challenging to sell a home during a divorce.
An individual should determine whether their state follows community property rules or equitable distribution rules. If an individual resides in a community property state, the parties may have to split their marital residence equally, if it was purchased during the marriage.
In an equitable division state, the division of property will be done according to the most fair distribution, which may not be a 50/50 split. For example, the spouse who obtains custody of the children may be awarded the family home while the other spouse may be awarded another piece of property, if the couple owned one together.
In many marriages, one spouse earned more money than the other. In some cases, one spouse did not earn any income and, instead, raised the children and supported the other spouse.
In these cases, alimony may be awarded to help the non-earning spouse or lower-earning spouse get back on their feet, get an education, or otherwise create financial stability for themselves. The spouse who receives alimony may use that income to pay their housing expenses.
Yes, there are numerous legal considerations involving alimony and mortgages. In a friendly divorce, the parties may agree to a co-ownership plan.
In these situations, the parties will agree on how the mortgage payments will be divided, when they will be made each month, and how the sale proceeds, should one occur in the future, will be allocated. This allows children to remain in the home without one party having to buy out the other.
In this scenario, however, one spouse is still financially dependent on the other. If there are late payments made on a co-owned home, it will impact both individual’s credit ratings, even if they are divorced.
In addition, if a homeowner has sold their property but has not lived there as their principal residence for at least two of the prior five years, they will not be able to use the home sale tax exemption. If the individual decides to sell the home, they will be responsible for paying the full capital gains taxes on any appreciation.
This could be an issue unless the parties can agree on a selling schedule that will give both owners the tax exclusion. Another key issue is the characterization of the home as separate property or marital property.
If the home is classified as community or marital property, any sale earnings will be split equally between the parties. Other issues to consider when selling a home during a divorce include:
Alimony issues may also arise, especially if an individual is financially dependent on the payments. For example, the other spouse may be late with their payments or they may not be complete, which may cause the recipient to be late on their own bills.
If an individual is seeking to enter into an alimony agreement that includes housing, they will have the strongest argument if they are also the individual who obtains custody of the children. This is because providing housing to the recipient will also provide housing to the children.
The individual requesting alimony can also show that they earned less than their ex-spouse, gave up a career, or did not pursue a career so they could support their ex-spouse and, therefore, now, cannot earn a comparable living.
How Can Alimony and Mortgage Payments Affect the Parties in a Divorce?
Alimony and mortgage payments, as discussed above, can have a major impact on both of the parties in a divorce. A court will often attempt to provide the recipient spouse with enough funding to continue the standard of living they were accustomed to during the marriage.
The paying ex-spouse will be able to claim the alimony payments as a deduction on their taxes. The recipient ex-spouse will be required to report them as income.
Mortgage payments can also be an important issue, as the ex-spouse who is awarded the home must be able to make the mortgage payments in order to avoid foreclosure.
Monies that are paid to a spouse or a former spouse under a separate or divorce order or agreement may be considered alimony or separate maintenance payments for income federal tax purposes. This may include a divorce decree, a separate maintenance decree, or a written separation agreement.
Certain alimony payments are deductible by the paying spouse. The recipient spouse has to include them in their income.
It is important to note that payments made under a divorce or separation agreement that was executed after 2018 or before 2019 cannot be deducted. The paying spouse will have to provide the Social Security number of their former spouse who is receiving the alimony payments of their federal income tax return.
The individual receiving the alimony payments is only required to include payments assigned by the divorce decree or property settlement agreement as income. It is important to note that if an individual has to pay for the mortgage, real estate taxes, and insurance premiums on a home their ex-spouse owns, they may deduct such payments as alimony.
The receiving spouse will have to report those payments as alimony as well. If an individual has to pay the mortgage, insurance premiums, and real estate taxes on a home they own jointly with their ex-spouse, they must deduct half of the total payments made.
Their ex-spouse will need to report half of the total payments made. If an individual’s ex-spouse makes payments to a third party on their behalf based on a requirement of a divorce decree or property settlement agreement, they must include the payments as income on their tax return.
Budgeting and financial planning are essential for individuals who are both paying and receiving alimony. Most individuals have a specific amount of income each month.
Creating a budget and financial plan can allow an individual to see how much they are spending on what, how much disposable income they have, and ensure that they are able to meet their financial obligations. Not paying alimony can have legal consequences, including being held in contempt of court.
Contempt of court may be punished by:
It is equally important for the recipient of alimony to budget and ensure that they will be able to cover their financial obligations if there are times that their alimony payments are late or are not received at all.
It is important for the parties to be aware that, if the economic position of either of the ex-spouses changes, they can petition to modify the alimony order. They may also petition to eliminate the alimony payments completely.
If you have any issues, questions, or concerns related to alimony and mortgage payments in your divorce, it is essential to consult with a family law attorney who can advise you of the property laws in your state and the possible consequences of certain actions with the properties you own. It may also be helpful to consult with an attorney before filing for divorce so you can be prepared and know the options and the consequences of those options.
Your lawyer will represent you during any court appearances and present the best case possible on your behalf. A divorce can be a difficult and contentious process, so it is important to have professional representation to ensure your rights are protected.
16 people have successfully posted their cases
