When buying a home, key tax considerations include mortgage interest deductions (up to $750,000 for joint filers), property tax deductions (capped at $10,000 annually under the SALT limit), and potential capital gains exclusion upon sale (up to $250,000 for single filers or $500,000 for joint filers if owned for two years). During divorce, tax implications depend on asset division: mortgage interest deductions shift to the spouse retaining the home if they itemize, while alimony payments are no longer deductible post-2018. Spousal support (maintenance) may be deductible if paid in cash. Selling the home during divorce may trigger taxable gains, split based on ownership periods.

The mortgage interest deduction incentivizes homeownership, reducing taxable income by an average of $9,800 annually for U.S. homeowners (National Association of Realtors, 2022). However, only 10% of filers itemize deductions in 2023, limiting benefit accessibility due to the $13,850 standard deduction for single filers and $27,700 for joint filers. Divorce-related tax complexity arises from alimony changes: the Tax Cuts and Jobs Act (2018) eliminated alimony deductibility, affecting 600,000 divorces yearly (U.S. Treasury, 2021). Property division often leads to tax inefficiencies; 45% of divorcing couples retain primary homes, risking higher future taxes if deductions are mismanaged (American Institute of CPAs, 2023). Capital gains exclusions save an average of $50,000 per seller ( IRS, 2022), but split ownership post-divorce may reduce this benefit. These factors highlight the need for structured financial planning during home purchases and divorces.