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I need some advice for a married friend. He and his wife currently live together in a house, but they are looking to temporarily (whatever that means) separate. To that end, they are looking to sell their house, and each get a new place of their own (apartment or house).

Their concerns are as follows:

If they sell the house and both move into apartments, they will end up owing money to the IRS next year because they won't have the mortgage interest deduction. Is there a way around that?

An easy one. Adjust their withholding upward by reducing the withholding allowances they claim on their W-4's.

Would filing "married separately" address that issue?

It would likely make it worse. MFS is a worse filing status than Single (which is not available to them while they "find themselves").

If they sell the house and both move into houses, what happens if/when they sell their individual houses in the future in order to move in together again?

It depends. IRS Publication 523 is the reference.

Will one of the houses be considered a "non-primary" residence because they're still legally married?

No. This is a facts and circumstances issue.

If that's the case, who determines which residence is the primary one? And, will any profit on the sale of the secondary residence be subject to capital gains taxes?


It's amazing how complicated life can get. Any other related advice is also welcome.

Your full-service tax advisor is glad to step up.

Even if it means parking a tractor on your tongue, stay as far out of this affair as you can. You are clearly closer to the husband than the wife, so I assume the majority, if not all, of the conversations will be with him. Practice the sympathetic, but neutral, look in your eyes. Think bassett hounds. Your response to his statements is "Hmmm," pronounced with the ends of the mouth turned down and the eyes slightly closed for negative remarks; the mouth is turned slightly up at the ends and the eyes widen with the same remark in response to positive remarks.

In no case, no matter how much he whines about her, jump on the bandwagon. That just about guarantees that they'll get back together and he will dismiss you with, "You never did like her!"

Good luck. Have you considered adjourning to a desert isle for the duration?

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