After a divorce, the person who claims the house on taxes is generally the spouse who owns the home and actually paid the mortgage interest and property taxes during the year. If both former spouses co-own the home and split the payments, each one deducts only the share they paid. Ownership, who wrote the checks, and what the divorce decree says all matter, and they don’t always point to the same person.
Deducting Mortgage Interest and Property Taxes
The rule is simple in principle: you can deduct mortgage interest and property taxes you actually paid on a home you own, if you itemize. If one former spouse moved out but keeps making all the mortgage payments on a jointly owned home, that spouse deducts all the interest. If both are still on the loan and each pays part, each deducts their own share.
Two dollar limits shape this. For mortgage debt taken on after December 15, 2017, interest is deductible on up to $750,000 of that debt. If you file as Married Filing Separately, which applies when your divorce isn’t final by December 31, the limit drops to $375,000.1Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction Older mortgage debt from before that date still falls under the previous $1 million cap.
Property taxes fall under the state and local tax (SALT) cap, which also covers state income or sales taxes. For 2026, that cap is roughly $40,000, indexed for inflation, a substantial increase from the $10,000 cap that applied from 2018 through 2024. Married Filing Separately cuts the SALT cap in half.
Both limits apply per return, not per property. If both former spouses file separately and each pays part of the property taxes on the same house, each claims only what they paid, up to their own SALT cap.
Filing Status Changes What You Can Claim
The IRS looks at your marital status on December 31 to set your filing status for the entire year. If the divorce is final by that date, you are unmarried for the whole year and file as Single or Head of Household.2Internal Revenue Service. Publication 504 (2025), Divorced or Separated Individuals If it isn’t final, you are still married in the IRS’s eyes and must file jointly or separately.
There is one exception. Even while still legally married, you can file as Head of Household if your spouse did not live in your home during the last six months of the year, you paid more than half the cost of keeping up that home, and a dependent child lived with you for more than half the year.3Internal Revenue Service. Filing Taxes After Divorce or Separation
Head of Household matters here because it gives a larger standard deduction and wider brackets than Single, and because only the custodial parent (the parent the child lived with for more nights that year) can use it.4Internal Revenue Service. Claiming a Child as a Dependent When Parents Are Divorced, Separated or Live Apart The costs that count toward paying “more than half” of the household include mortgage interest, property taxes, insurance, repairs, utilities, and food eaten at home; they do not include clothing, education, medical bills, or vacations.5Internal Revenue Service. Publication 501 (2025), Dependents, Standard Deduction, and Filing Information
When Mortgage Payments Are Really Alimony
For divorce agreements finalized after December 31, 2018, alimony is neither deductible by the payer nor taxable to the recipient.6Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance A former spouse who no longer lives in the house but keeps paying the mortgage under one of these newer agreements is simply paying interest on a home they still co-own, and they claim the deduction on that basis.
For agreements finalized on or before December 31, 2018, the older rules still govern unless a later modification explicitly adopted the post-2018 treatment.6Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance Under those older rules, alimony was deductible by the payer and taxable to the recipient.7Internal Revenue Service. Divorce or Separation May Have an Effect on Taxes If mortgage payments were classified as alimony under a pre-2019 decree, the resident spouse reports those payments as income and then claims the corresponding mortgage interest deduction on their own return.
Who Claims the Gain When the House Is Sold
When you sell a primary residence, you can exclude up to $250,000 of profit from your taxable income if you owned and used the home as your main home for at least two of the five years before the sale. A couple who sells before the divorce is final and files jointly can exclude up to $500,000, as long as both meet the two-year use test and at least one meets the ownership test.8Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence After the divorce, each person is limited to $250,000. When the expected gain sits between those two figures, timing the sale before the decree can be worth thinking through.
A common problem after a divorce: one spouse moves out but stays on the title. Years go by, and that spouse no longer meets the two-year use requirement on their own. There is a fix. If the divorce decree or separation agreement grants your former spouse the right to live in the home, you are treated as using the home as your principal residence for that entire period.8Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence Both former spouses can then claim their own $250,000 exclusion when the house is eventually sold. Without that language, the non-resident spouse’s exclusion gradually erodes once they’ve been out of the home for more than three years.
If You Keep the House in the Settlement
When one spouse keeps the house as part of the settlement, the transfer itself is tax-free. Federal law treats property transfers between spouses, and between former spouses if the transfer happens within one year of the divorce or is related to it, as non-taxable events.9Office of the Law Revision Counsel. 26 USC 1041 – Transfers of Property Between Spouses or Incident to Divorce
The catch is basis. The spouse who receives the home takes on the original cost basis from when the home was bought, not its current market value. If you and your spouse paid $300,000 and the house is now worth $600,000, your basis is still $300,000. When you sell, up to $300,000 of that difference is taxable gain, and the $250,000 single-filer exclusion may not cover all of it. Capital improvements made during the marriage (a new roof, a kitchen remodel, an addition) raise the basis, so records of those improvements are worth keeping.10Internal Revenue Service. Property (Basis, Sale of Home, etc.) 3
Keeping a $600,000 house is not the same as receiving $600,000 in cash. The embedded tax liability is real, and it should be weighed against other assets on the settlement table.
What Your Divorce Decree Can and Cannot Do
Your divorce decree matters, but it does not override federal tax rules. A family court can allocate who pays the mortgage or who claims the child as a dependent, but the IRS still applies its own tests. A decree that awards Head of Household status to the non-custodial parent, for example, will not stand up: federal law reserves that filing status for the parent the child actually lived with. The decree cannot create a tax benefit the code does not allow.
Where the decree does carry weight is in matching payments to deductions. Since you can only deduct what you actually paid on a home you own, the agreement needs to line up with the positions both people plan to take on their returns. If the decree makes you responsible for the mortgage but your former spouse writes the checks, neither of you may be able to claim the interest cleanly. And if you want the non-resident spouse to preserve the capital gains exclusion, the decree has to explicitly give the resident spouse the right to live in the home.8Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence The tax outcome follows the facts and the code, with the decree there to make sure the facts land where both sides intended.