Who should pay taxes, interest, and penalties of unreported rental income?

Question

My (ex-wife) and I have been separated for 10 years. After we started the divorce procedure, her lawyer asked that she would use the marital house as residence for her and our 2 grown up children till the divorce was finalized and the house would be sold.
She lived in the house for a while. Then she bought a new house and rented our marital home and with its rent has been paying the mortgage and expenses of her new house. I have never received any money from the rent. Who should pay taxes, interest, and penalties of unreported rental income? She has been signing the leases.

neoplop · Accepted Answer

The friendly folks at Canada Revenue Agency will answer that semi-complicated question for you. ;)

1-800-959-8281

The Arbiter of common sense · Answer

This is messy.  It depends on the details of your divorce agreement.  Usually, the owner of the property is responsible for the tax on rental income, but in this case that seems unreasonable if she has been receiving the income.

You should contact your divorce lawyer first, then a tax lawyer.

Joe S · Answer

Who ever received the rental income has to report it on there income tax return regardless of what the money was used for.

Jeremy Lichtman · Answer

Best talk to a lawyer - there could be all kinds of little details that could make a difference here.

In general though - her lease, her income, her taxes.

Chad B · Answer

If it was in writing that she was to sell the house after the divorce, then she is responsible to pay all fees after the divorce. It was her choice not to report it, not yours. 

I would get a lawyer if their is an IRS issue, things can get messy dealing with the gov't and they do not care about your story, they just want their money. 

Good Luck.

Who should pay taxes, interest, and penalties of unreported rental income?

5 Answers