How DOMA (Defense of Marriage Act) Affects Same-Sex Mortgage Tax Deduction

At first the extent of discrimination is subtle when it comes to real estate laws with same sex couples, not realizing the ramifications financially until they have actually bought a house together and it is time to file income tax.  It is then that they realize that that the federal definition of marriage deprives them of the right to claim their mortgage tax deduction jointly.  In short, this is like being penalized financially for not being heterosexual, especially if one partner passes away and the other is left holding the bag for paying all of the taxes.

Gay MarriageThe federal definition of marriage is known as DOMA, which stands for the Defense of Marriage Act. The Supreme Court may strike down this law, which has been challenged as unconstitutional, because it strictly defines marriage as being a union between a man and a woman and does not recognize the legal union of gay/lesbian couples.

Quite simply marriage is a legal status that provides both spouses various reciprocal protections, rights and obligations. LGBT marriage operates in the same way as heterosexual marriage in a handful of states. However they still do not have the same rights at the federal level that heterosexuals do and this has resulted in misery and even loss of property for some bereaved gay and lesbian partners who cannot afford to pay post-humus taxes.

There are states that allow same sex couples to be married but they have to file their federal income taxes separately because the Defense of Marriage Act prevents gay or lesbian marriages from being recognized by the Federal Government. This means that when the taxes are filed, only one partner can claim the tax deduction or the mortgage even though there is, in reality, two people contributing to the overall cost of the mortgage.

The entire challenge to DOMA in the first place is based on the case of an 83 year old New York woman who was forced to pay $363,000.00 in real estate taxes after her same sex partner died because the government refused to recognize that she was married.  These same taxes would not have applied if she had been married to a man.

The upshot is that married gays and lesbians have the same status as unmarried people ~ Two unmarried people who share a joint mortgage can split the mortgage in two and both partners can then claim the deduction. However keep in mind that the amount to be claimed must be higher than the standard deduction in order to be worth it. The clear advantage to filing as a married couple is that the joint contribution to the mortgage raises the deduction a lot higher. If a gay couple is not allowed to file jointly then that can be considered to be discrimination as the straight couple who lives just next door is allowed to file jointly and reap the financial rewards.

So at this point in time it does not really matter if you move to a state that allows gay marriage or not.  As long as DOMA is not overturned and same sex marriages are not recognized this discrimination against same-sex couples that own joint real-estate will continue to exist.

Author Jeff Hammerberg is the Founding CEO of Free Instant Access to the Nation’s Top Gay, Lesbian and Gay Friendly Realtors Coast to Coast. FREE Buyers Representation ~ Free Relocation Kit to any City, USA ~ Free Sellers Market Analysis for home sellers.

Author: admin

In the mid 1990’s Jeff Hammerberg a Gay REALTOR working at a successful ReMax Office in Colorado witnessed discrimination first hand and has spent his career changing the way the Gay & Lesbian Community buys or sells a home. “My goal is to make sure when you walk in to or call a real estate office, you have an appointment with a top producing agent that you know stands in full support of you as a gay or lesbian person and works with you as your advocate throughout any transaction. Let’s make sure the commissions earned by an agent you employ, are not being used to fund positions or causes that don’t stand in full support of the LGBT Community. Many of our Gay & Lesbian REALTORS are Top Producers in their communities, offering unparalleled service today and in the future. There is no cost or obligation to use any of our services or directories.”