Discussion:Divorce Settlement-Interest Payment

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Discussion Forum Index --> Basic Tax Questions --> Divorce Settlement-Interest Payment
Discussion Forum Index --> Tax Questions --> Divorce Settlement-Interest Payment

Johnthecpa (talk|edits) said:

1 April 2008
My client issued a $600,000 note payable to his ex-wife in 2007 (divorced in 2007)as part of the property settlement. The note calls for interest payments at a 6% APR, with the note fully amortized over 5 years. Is the interest paid by my client to his ex-wife merely non-deductible personal interest?

Thanks,

John

Kevinh5 (talk|edits) said:

1 April 2008
how is it secured?

Johnthecpa (talk|edits) said:

1 April 2008
It is secured by rental property owned by my client.

Kevinh5 (talk|edits) said:

2 April 2008
not deductible

Taxwizard (talk|edits) said:

2 April 2008
If the debt relates to the buy-out of the ex-wife's interest in the rental property, the interest should be deductible on Sch. E. Sec. 1041 does not apply to interest on these types of debts.

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