refinance

Can same-sex couple refinance?

Don TaylorDear Dr. Don,
My question involves refinancing of mortgages for gay couples. I have poor credit after the loss of my job many years ago. However, I always ensured that my mortgage payments were made. The payments were late several times; however, it was always the first bill paid, regardless of my other bills.

Recently, my state government accepted our same-sex marriage and I'd like to know whether I can qualify to refinance the mortgage based on my spouse's income?

Thank you,
-- William Wedded

Dear William,
There's been a lot of good news for gay and lesbian couples in recent years where states have allowed them to marry. Also new: The federal government granting tax benefits to these couples. 

On Aug. 29, 2013, the Internal Revenue Service announced:
The U.S. Department of the Treasury and the IRS today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple live in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

Under the ruling, same-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.

The following month, the IRS issued Notice 2013-61 providing guidance for employers and employees to claim refunds or adjust overpayments of FICA taxes and employment taxes with respect to certain benefits and remunerations provided to same-sex spouses.

Depending on how long you've been married, you may be entitled to refunds for the 2010-2012 tax years based on the new ruling. This would be a good time to work with a tax professional to explore these issues further.

You've always had the ability to own the house with your partner (now your spouse) and to have the lender consider both incomes and credit histories in considering a loan application. The issues prior to the ruling largely dealt with gift-tax ramifications when gifting the equity in the home to your partner so that both of you would be on the deed and the loan for the property, estate planning implications, and how the property was titled. The change in the tax ruling treats same-sex spouses the same as heterosexual spouses when it comes to these issues.

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