Do I Get a Spousal Support Deduction for Payments Made on the Residence Owned With My Wife?

Q. If I pay make the mortgage payments on our family home, which my husband occupies, as part of our agreement for spousal support, is this tax deductible?

Fred in La Quinta, CA.

I've also written a Blog today concerning the tax deductibility of voluntary spousal support payments. Please read it. It discusses the requirements of IRC section 71, including the requirement that there be a "divorce or separation instrument" before payments made can properly be deducted.

People who've separated often voluntarily support their spouse for a time, while they wait to decide what to do next. That support may be deductible by the payor (and taxable to the recipient) if certain conditions are met. Problems arise, and the file gets flagged by the IRS, in particular where one party claims the spousal support deduction, but the other does not admit the income in his or her corresponding separate return. You do not claim spousal support deductions in a joint tax return.

What happens when your ex is living in the family home, and you are paying the mortgage in lieu of directly paying the support to that person? This is common where one party wishes to ensure that the mortgage is timely paid in order to protect his or her credit.

Even if these mortgage payments otherwise seem to qualify for deduction, they will be disallowed by the IRS if you are audited IF you are personally obligated to the mortgage holder. If you are an owner or co-owner of the home and signed the note, payments for property taxes and insurance premiums on the property may also be disallowed.

To the extent that what is otherwise considered spousal support (including per court support awards) is paid indirectly on property owned by the payor spouse instead of to the spouse themself, no matter that it is used by, or benefits, the supported spouse, the Tax Court has held that such payments do not qualify as payments "on behalf of" your spouse for purposes of a support deduction. See Zinsmeister v. Commr., TC Memo. 2000-364, aff'd (8th Cir. 2001) 21 Fed.Appx 529. Moreover, the interest deduction for the house may not be deducted either, under certain circumstances.

You'd be wise to investigate these issues further with a CPA or tax specialist attorney. My goal is to alert you to potential traps, so do your due diligence!

T. W. Arnold, III