First you have a legal issue and you really need to talk to a local attorney since some of what you are asking is smelly from many view points and can get you in real trouble in the future no matter how congenial things are now ... here are my thoughts which are not a legal opinion :
1. Keep the current mortgage term (only his name on the mortgage) for 10 years and I need to sell or refinance within 10 years. There may be issues with this for him since you will be affecting his credit scores if you don't pay on time or default in the futuree.
2. All sales proceeds will go to me but I will be responsible for mortgage payments and all related expenses When you sell all owners on the deed will get a 1099-S to report the sale so you will need to get him off the deed before you sell which he may not allow.
3. His name and my name are on the deed (50% ownership each) Not an issue except for #2.
I might need to relocate next year and I am thinking to rent out the house. Here are my questions.
1. Can I deduct mortgage interest since I technically pay his mortgage? I do not know the divorce settlement is sufficient legal proof that I am responsible for the mortgage payment. This is where you will run into trouble ... although you are not on the mortgage and are not responsible for the payment you may be able to deduct the interest you pay because you own the property but expect to fight this point with the IRS. Also if you rent this out you will need to change the homeowner's insurance and let the mortgage folks know that neigther of you live there anymore and it is now a rental which may not be allowed by the bank(read the fine print in the mortgage document). You really should get the mortage out of his name if you are keeping it in the divorce ... waiting 10 years may not be possible or wise.
2. He is okay with me collecting all rental income, but can I claim 100% rental income on my tax return, or do both of us need to claim 50% rental income each? If you get all the money then you need to claim it all. He would have nothing to report.
3. Can I deduct other expenses such as depreciation, homeowner's insurance, property tax....etc on my tax return? Can I deduct only 50% even if I collect all rental income? You can claim all the income and expenses on your Sch E however you can only depreciate 1/2 the house (the portion you own) which can be a negative to you now and an issue for him later.
Bottom line ... seek local professional assitance before you do anything. Keeping unneeded ties to each other after a divorce is a recipe for disaster.
