Lump Sum Buyout and Taxes question


When one party “buys” the other out…

  1. What happens to the mortgage interest write off for the year?
  2. Can the lump sum be given as a check payable to a INC or LLC? rather then the individual
  3. Can the lump sum be given in a name of a trust? rather then the individual?


If you both lived in the home during the year, it may be better to file jointly you should check with your accountant to see which method of filing is the most advantageous to you. If you do end up filing separately, the spouse who actually paid the mortgage will get the deduction.
A lump sum can be made payable to any person of entity, in any event, a distributive award or buyout is a non-taxable transfer of property.