In addition to its often painful personal implications, the process of divorce can have serious financial effects as well. In fact, many American divorces are caused by explosive disputes over income, debt and other financial issues. The majority of divorces would be far simpler and take far less time without these headaches.
If you're a homeowner who's going through this painful process, chances are good that your house has become a major point of contention between you and your former spouse. After all, you probably aren't comfortable with the idea of sharing the property. It's likely that one of you will be able to live in the house after your divorce. The other will have to find another place to stay.
Before your divorce has been finalized, you and your spouse will have to reach a temporary agreement about what to do with the house. If the mortgage on the house is jointly held, the spouse who remains in it after the separation is typically responsible for paying its mortgage. If there is disagreement on this point, you'll need to gather your respective lawyers and take the matter to court.
The judge who presides over your case will typically issue a ruling that formalizes any agreement that you and your spouse reach on this matter. In many cases, you'll each need to contribute an equitable amount towards the monthly mortgage payment on the house. These payments may be prorated on the basis of income. Alternatively, the spouse who remains in the house may be compelled to pay a larger share of its mortgage.
If the mortgage on the property is held by a single spouse, the matter can become more complicated. If there are kids involved in the divorce, the parent who receives provisional custody of the children is often entitled to remain in the family home. Since this parent may not be the home's mortgage-holder, the judge who presides over the case may force the mortgage-holder to continue making payments on the house. If you're a non-custodial parent who also holds the mortgage on your family home, this may seem unfair.
Such situations often have silver linings. Since you're continuing to make the mortgage payments on your home, you may continue to claim the interest that accrues on the mortgage as a tax deduction. If these mortgage payments endure as part of a spousal support package, you'll be able to use this deduction in perpetuity.