Detailed Answer
Short answer: It depends on the legal context. Under Missouri law, whether you can deduct mortgage payments, property taxes, insurance, HOA dues, and other carrying costs from the sale proceeds before splitting the net sale depends on whether the property is being divided in a divorce, being partitioned between co-owners, or sold by a sole owner. Courts and accountants treat these items differently depending on whether payments reduced principal (building equity), paid interest/taxes (carrying costs), or came from separate vs. joint funds.
How Missouri law approaches this in divorce (dissolution) cases
Missouri is an equitable distribution state for marital property. The statute that governs disposition of marital property in a dissolution is RSMo §452.330. The court divides property equitably, taking into account contributions of each spouse, the economic circumstances of each spouse, and other statutory factors. That means a court may give a spouse credit or reimbursement for payments made toward mortgage principal, property taxes, insurance, or necessary carrying costs, especially if those payments were made from separate (non‑marital) funds or if one spouse paid a disproportionate share.
Typical treatment in practice:
- Mortgage principal payments usually increase the owners’ equity in the home. When the home sells, those payments are already reflected in the net equity (sale price minus outstanding mortgage). A court may not separately “credit” principal payments unless they were made from separate property and the payer asks the court to reimburse separate contributions.
- Interest, property taxes, insurance, HOA dues, and ordinary carrying costs are generally treated as household or marital expenses. Courts sometimes treat those as reasons to adjust the equitable split if one spouse disproportionately shouldered them or used separate funds to pay them.
- If a spouse used premarital or otherwise separate funds to pay down the mortgage or for repairs/improvements, the spouse can ask for a reimbursement or credit for that separate contribution, subject to proof and the court’s discretion.
How Missouri law treats co-owners (not married) and partition situations
When non‑married co-owners sell or partition property, equity and accounting principles apply. A co-owner who paid more than their share of necessary expenses (mortgage principal, taxes, insurance, repairs, HOA dues) can often seek reimbursement or a credit in an accounting or partition action. The typical remedy is:
- Reduce gross sale proceeds by liens, selling costs, and necessary expenses.
- Credit the co-owner for payments that were required to preserve the property or that reduced debt (for example, principal payments or payments made to prevent foreclosure).
- Divide the remaining equity according to the ownership interests, after allowing credits for reimbursement or contribution.
The exact result depends on the facts, the documentation, and a court’s equitable judgment.
Practical illustrations
Example A — Married couple selling their home: Sale price $300,000. Outstanding mortgage $200,000. Net before closing costs = $100,000. Spouse A used separate funds to pay $10,000 of the mortgage principal before sale and can prove it. The court may reimburse Spouse A’s $10,000 contribution (or account for it) before or as part of an equitable split of the remaining proceeds.
Example B — Two tenants in common where one paid the mortgage and taxes for several years: Co-owner 1 paid $20,000 in mortgage principal and $5,000 in taxes/insurance. In a partition/accounting, Co-owner 1 may receive a credit for the $20,000 principal that increased equity; the $5,000 in carrying costs may be reimbursed or offset depending on whether they preserved value or were ordinary operating costs.
Key factors courts and accountants look at
- Did the payments reduce the mortgage principal (equity) or were they interest/taxes/insurance (carrying costs)?
- Were payments made from marital funds, separate funds, or by one co-owner alone?
- Were payments necessary to preserve the property (prevent foreclosure, pay taxes to avoid lien) or ordinary household expenses?
- Is there documentation (bank statements, canceled checks, mortgage payoff statements, tax receipts, escrow histories)?
- What did the parties agree to (written agreement, oral agreement, or course of conduct)?
How to protect your right to reimbursement or credit
- Collect and preserve documentation: mortgage statements (showing principal vs. interest), bank records, receipts for property taxes, insurance invoices, HOA statements, and proof of source of funds.
- Get a payoff statement and an independent appraisal or broker price opinion so you can show market value and outstanding liens.
- If possible, negotiate a written agreement before sale that allocates costs and credits. Courts give weight to clear written agreements.
- If parties cannot agree, consider mediation or ask a court for an accounting or partition. In dissolution cases, raise reimbursement claims early and present proof at the final hearing.
Helpful Hints
- Keep every mortgage statement and canceled check — these show how much principal you paid vs. interest.
- Keep receipts for property taxes, insurance, HOA dues, and repairs. Mark whether checks came from joint accounts or separate accounts.
- When in doubt, get an appraisal before sale so you can show how much equity existed and how payments affected value.
- Ask for an accounting in writing if you are a co-owner and the other owner handled the payments.
- In divorce cases, consult the statute on disposition of property: RSMo §452.330.
- Small disagreements can often be resolved by settlement or mediation more cheaply than court proceedings.
When to get a lawyer
Talk to an attorney if the amounts involved are significant, if the other party disputes the payments, if you need a partition action, or if you need help proving separate vs. marital funds in a dissolution. An attorney can help calculate appropriate credits, prepare an accounting, and protect your legal rights in court or settlement.
Where to start with an attorney
Bring these items to your first meeting: closing statement or proposed settlement statement, mortgage payoff history, bank records showing payments, receipts for taxes/insurance/HOA, and any written agreements about ownership or expense sharing.
Disclaimer
This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. For advice about your specific situation, consult a licensed Missouri attorney.