Owner occupancy duplex and tax question

[Jon A.]

I have recently separated from my marriage partner and moved into a duplex that I purchased before marriage. This has all happened within the last 30 days. We have a HELOC that we qualified for together back in 2020 that I pulled the money out of and put into a saving account for fear of them cutting the line of credit. I have the money and can pay it back but then I wouldn't have any cash reserved. We would both like her off of the HELOC so I am considering just paying it back and refinancing the property to have some reserves moving forward. I will obviously be losing some income as I am now living in half of the duplex.

The state of NC requires that we be separated for one year before a divorce can be final. Therefore, we will still be married for the tax year of 2024.

Going forward this year I am not sure if we should file our taxes "married but jointly" or married but separately" for the tax year of 2023. I am concerned that if we file jointly I will not be able to refinance in my own name, but I am also concerned about the tax burden if we file "married but separately". Any insight is greatly appreciated. Thanks in advance. 

[Sean O'Keefe]

@Jon A. this is a dilemma ..

• Have your CPA prepare a Draft of the tax return that shows "married filing jointly" and "married filing separately" so you can evaluate the tax impact of both options. Most CPA tax software can give you a 1-page summary with both options in separate columns, on 1 page, so you can do side-by-side comparisons.
• Next, reach out to a couple of lenders to understand the impact of each and provide them with a draft of both tax returns to understand how it impacts loans
  

Happy 2024!
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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.