Taxes and Accounting Addendum

1. Mortgage Interest and Property Tax Deduction

Under New York law and IRS rules, deductions must reflect actual payments made by each liable party.

A. How will deductions be allocated?

Based on actual payments made by each Co-Owner (per IRS and NY precedent)

Based on ownership percentages

Other

B. How will payments be made?

Each Co-Owner pays their share directly

One Co-Owner pays, others reimburse (with documentation)

Other

C. How will deduction records be tracked?

Bank statements and receipts exchanged annually

Shared spreadsheet or tool

Other

2. Mortgage Interest Statement (Form 1098)

In NYC, mortgage lenders may only list one borrower on Form 1098. IRS rules allow both to claim deductions if properly allocated.

A. Who is listed on Form 1098?

Co-Owner A

Co-Owner B

Both (if available)

N/A (no mortgage)

B. How will the deduction be reported?

Listed owner uses Line 8a, other uses Line 8b with supporting statement

Attach a co-owner memo to IRS filing

Other

3. Rental Use (if any)

A. Is the property or part of it rented?

Yes

B. How is rental income and expense split?

By ownership percentage

By who paid or manages the property

Other

C. How will depreciation and Schedule E be handled?

Each Co-Owner reports separately on Schedule E

One Co-Owner files jointly for both

File a partnership return (Form 1065)

Other

4. Capital Gains and Sale Allocation

New York imposes capital gains tax and city transfer tax. IRS rules also apply on basis and exclusions.

A. How will each Co-Owner’s tax basis be tracked?

According to each person’s initial contributions and capital improvements

By ownership percentage

Other

B. How will proceeds be split if the property is sold?

Based on ownership share

Adjusted for past contributions

Other

C. Will you apply the home sale exclusion (IRC §121)?

Yes, each person will apply separately

No, not a personal residence

Other

A. If one Co-Owner causes a tax problem, what happens?

That Co-Owner indemnifies the other(s)

Costs shared unless misreporting is proven

Other

B. How will tax-related disputes be resolved?

Mediation:

Mediator name (if known)

Mediation costs

Shared

Paid by initiating party

Other

Arbitration:

Arbitration service

Costs

Shared

Paid by initiating party

Other

C. Do Co-Owners agree to keep audit-ready financial records?

Yes, each will maintain payment records, 1098 allocations, and depreciation logs

Other

D. Depreciation elections for rental use:

Each Co-Owner elects depreciation separately on their portion

We will apply jointly for partnership treatment

Other

A. Will this addendum bind heirs or buyers?

Yes, successors must sign on to the same terms

No, new owners will need a new agreement

Other

Instructions

Review NYC and IRS tax rules or speak with a professional.
Answer all items clearly and fully.
3. Include this Addendum with your final Real Estate Prenup.

Instructions

Review NYC and IRS tax rules or speak with a professional.
Answer all items clearly and fully.
Include this Addendum with your final Real Estate Prenup.

Signatures

By signing below, Co-Owners agree to the above tax terms in compliance with IRS guidance and NYC/NYS law.

Signatures

By signing below, Co-Owners agree to the above tax terms in compliance with IRS guidance and NYC/NYS law.

Co-Owner A:

Name

Signature

Date

MM slash DD slash YYYY

Co-Owner B:

Name

Signature

Date

MM slash DD slash YYYY

Co-Owner C:

Name

Signature

Date

MM slash DD slash YYYY

Co-Owner D:

Enter name

Signature

Date

MM slash DD slash YYYY

Real Estate Prenup – Taxes and Accounting Addendum Questionnaire

1. Mortgage Interest and Property Tax Deduction

2. Mortgage Interest Statement (Form 1098)

3. Rental Use (if any)

4. Capital Gains and Sale Allocation

B. How will tax-related disputes be resolved?

Instructions

Instructions

Signatures

Signatures

Co-Owner A:

Co-Owner B:

Co-Owner C:

Co-Owner D:

NAVIGATION

LEGAL