Property, Alimony and Taxes


#1

I have a few questions.

  1. A married couple jointly own 2 residences (primary and secondary) both with mortgages in both spouses names. The separation agreement gives one property to husband and one to wife with the requirement that each spouse refinance their respective property within 180 days. Are banks REQUIRED to refinance the mortgages in the name of the spouse named as owner of such property in the agreement or can they deny the refi if the spouse is not qualified under the bank’s lending policies?

  2. A separation agreement calls for wife to live in the marital residence. For a period of time detailed in the agreement, the property deed and mortgage remain in joint names. For this same period of time, husband will pay the mortgage on the property. Is the mortgage payment considered taxable alimony? Can the agreement stipulate that wife gets to take the mortgage interest deduction even though it is being paid by husband?


#2

Banks are not required to complete a refinance, as they are not bound by the agreement. Further a party who cannot refinance will not be in breach of the agreement if they cannot qualify for a loan, but will be responsible for indemnifying the other party in the event of a default on the loan.

The mortgage payment is not considered alimony if it is not specifically designated as such in the Agreement, and Wife can claim the interest deduction if the agreement allows her to.


#3

This sounds like a train going at 90 miles an hour towards a shaky bridge. It needs to get on a siding until the bridge is structurally sound.

Specifically you should do the refinancing part before you sign the final divorce. Should you could idemnify the other party. And then when the don’t pay you will be paying lawyers more and more money to collect.

I hope the brakes aren’t out on your train and you both agree to wait until all the financial issues are resolved before you get to the divorce bridge. Good luck!

I have a friend who is still waiting since October for her final payment. Probably won’t see it for quite some time.