(Part 5 is continuation of series, links to all parts are provided at end of this blog post. This valuable series on Dividing Property In A Divorce Tax Traps has been updated for the Tax Cuts And Jobs Act (TCJA) and the Cares Act. This series is provided by David Ellis of Ellis & Ellis CPAs in Pasadena, CA.)
Example: Rob Sr. and Mary are divorced. Mary and their son Rob Jr. continue to live in the former marital residence while Rob Sr. lives across town in an apartment. Rob Sr. pays the mortgage payment on the home.
Since Rob Sr. no longer uses the home as his principal residence, he cannot deduct the mortgage interest attributed to the payments under the principal residence mortgage interest rules. However, since Rob Jr. lives in the home, Rob Sr. can deduct the mortgage interest (assuming it otherwise qualifies) under the rules that allow mortgage interest for a second home to be deductible by a nonresident spouse when a direct family member continues to live in the residence.