Legal Question in Family Law in California

division of property

My boyfriend and I just broke up. We owned a house together,

and he refinanced to buy me out of my percentage of the

ownership. (I paid 58% of what we had agreed between us was

our basis for ownership over the last 4 years.) We now have a

$24,000 ''difference of opinion'' as to how much he owes me. He

has accountants telling him that even though we did not actually

sell the house, we are supposed to deduct fictional closing costs

as though we had. I am also supposed to discount the tax benefit I

took for deducting the mortgage interest. (I happen to make 3-4x

what he does, and we had agreed at the time that I needed the

deduction more.) There is also now supposed to be some kind of

hypothetical interest figured in, too.

I thoroughly object to including these non-fact-based items in our

settlement. Why are accountants telling him these things? Is there

legal precedent for this? How would this be resolved in court, if we

had to take it there?

Please let me know if you need any more information or details. I

appreciate any light you can shed on this subject.


Asked on 11/06/02, 10:01 pm

3 Answers from Attorneys
Martin Lathrop Russakow, Ryan & Johnson

Re: division of property

The words of your ex and anyone he is consulting must be taken with a considerable grain of salt. The only thing that should come into consideration is the interest deduction you enjoyed. I suggest you find a professional mediator and pay him or her for an hour or two of their time to resolve the matter. The easy way to figure it out is take the amount of profit that would be realized if the house sold for whatever agreed upon price there is and divide that profit according the % of ownership interest each of you have then give him a credit for the interest deduction. No fictional closing costs and no interest rates...Use your collective common sense and agree on a figure or take all your information to a mediator.

Good luck-Martin

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Answered on 11/06/02, 10:34 pm
Matthew Kremer Law Offices of Matthew M. Kremer

Re: division of property

I agree with the other two responses: No deduction for cost of sale unless there actually is a sale. I'm not sure I agree with the concept of charging you for the interest deduction taken, at least to the extent that he could not have benefited from taking the deduction. Also, you took the deduction with his consent, essentially an oral contract. If there was no agreement to reimburse him, I don't see why you should have to do so, unless it is simply a way to compromise the issues. To that extent, I would only give him the benefit of the taxes he would have saved in taking 1/2 of the deduction, not what it saved you.

If this goes to court, it would be a partition action. You might be able to recover fees.

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Answered on 11/08/02, 11:50 am
Brian Levy, Esq. Law Office of Brian Don Levy

Reply: division of property

This is not a sale and therefore there should be no deduction for costs of sale. This is a buy out between owners. If you were husband and wife, and one was buying out the other, the court would not permit the deduction for costs of sale. Stand your ground!

Good luck to you!

Brian Levy, Esq.

Law Offices of Brian Don Levy

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Answered on 11/07/02, 1:22 pm


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