Answer

Short answer: In Nevada, sale proceeds are first used to pay secured lenders and closing costs. Whether you can deduct the mortgage payments, property taxes, insurance or other carrying costs you paid before distributing the remainder depends on who legally held the debt or lien, whether you and the other owner(s) agreed to contributions, and whether a court is asked to make an equitable accounting (for example, in a partition action or divorce). You can often seek reimbursement or a credit for certain payments, especially when those payments preserved the property or reduced the principal balance, but you must document them and may need a court order or the cooperation of the co-owner(s).

How the money flows at sale

When real estate is sold, the closing process follows a standard priority:

Payoff of recorded liens and mortgages (lenders are paid from proceeds according to priority).
Payment of closing costs and sale expenses (commissions, escrow fees, taxes owed at closing).
Proration of taxes, HOA fees and utilities (these are usually prorated on the settlement statement).
Net proceeds then go to the owner(s) based on title ownership or court division (tenants in common shares, community property splits in divorce, etc.).

Because recorded liens (like a mortgage) have priority, a buyer’s funds are typically used to satisfy the mortgage lien before any co-owner receives their share. You cannot simply withhold mortgage payoff from the lender and treat it as an offset against your share unless the lender agrees or a court permits it.

Common situations and how Nevada law treats them

1) Co-owners (tenants in common or joint owners)

If multiple people own a property and one owner has been paying mortgage, taxes, insurance or repairs, Nevada courts can order an accounting in a partition action and may give credits for reasonable payments made to preserve the property. See NRS Chapter 40 (actions for partition) for the statutory scheme governing partition and sale: NRS Chapter 40 (Partition).

Key points:

Payments that preserved the property (taxes, insurance, urgent repairs) are more likely to be allowed as credits or reimbursed.
Payments that reduced the mortgage principal increased the paying owner’s equity; a court or settlement will typically recognize that increased equity (you effectively bought down the debt).
Payment of interest or discretionary personal payments may be treated differently than necessary preservation expenses.
Documentation is critical: mortgage statements showing principal reduction, receipts for taxes and insurance, cancelled checks and invoices help support a claim for credit or reimbursement.

2) Married couples and divorce (community property rules)

Nevada is a community property state. In a divorce, the family court divides community assets and liabilities equitably under the divorce statutes (see NRS Chapter 125 (Divorce and Separation)). Whether a spouse can claim reimbursement for mortgage or carrying costs depends on whether the payments were community or separate funds, whether the payments benefited the community, and whether the court treats them as reimbursements or adjustments to property division.

Common outcomes:

If one spouse paid down mortgage principal using separate funds, that spouse may seek reimbursement or a credit for the separate contribution.
If community funds paid the mortgage, the payment typically affects the community’s equity and will be accounted for in the division.
Courts examine records and the nature of each payment when deciding equitable adjustments.

3) Secured lender priority and payoffs

Where a mortgage is recorded, the lender’s payoff is due from sale proceeds. You cannot claim the mortgage payoff as part of your share of proceeds; instead, the lender is paid and the remainder is distributed. If you personally made mortgage payments that reduced the principal before sale, that reduction increased your ownership equity (which affects your net share at closing).

For Nevada statutes governing mortgages and deeds of trust, see: NRS Chapter 107 (Mortgages and Deeds of Trust).

What payments are most likely to be credited or reimbursed?

Mortgage principal payments (these increase equity and are usually recognized as benefiting the payor).
Property taxes and assessments paid to prevent tax sale (courts typically recognize these as necessary preservation costs).
Insurance premiums necessary to protect the property.
Urgent repairs required to keep the property marketable or to prevent further damage.
Costs that are agreed in writing between owners (a written agreement providing for reimbursement or credit will carry weight).

Less likely to be fully reimbursed: discretionary expenses, personal living costs, or improvements that were not agreed to or that primarily benefit the paying co-owner without clear increased value to all owners.

Practical examples (hypotheticals)

Example 1 — Co-owner pays mortgage principal: Two tenants in common sell a house for $400,000. There is a $200,000 mortgage before sale. Owner A has been paying mortgage each month and during ownership reduced principal by $20,000. At closing the lender will be paid the outstanding mortgage payoff; Owner A can claim that the reduction in principal increased their equity interest and seek a corresponding larger share of the net proceeds.

Example 2 — Co-owner pays property taxes and insurance: One owner paid $6,000 in property taxes and $1,200 in insurance over two years to avoid tax sale and protect the property. In a partition action the court may order the paying owner reimbursed or given credit from sale proceeds for those necessary preservation costs.

What you should do now — practical steps

Gather documents: mortgage statements showing principal/interest breakdown, canceled checks, tax bills, insurance invoices, repair receipts, closing statements and any written agreements between owners.
Determine title and lien status: check the county recorder’s records and the payoff demand from the mortgagee to see outstanding liens and priorities.
Ask for a written agreement: if co-owners agree on credits or reimbursements, reduce that agreement to writing and include numbers and supporting docs.
At sale, review the settlement statement (Closing Disclosure/HUD-1) carefully for lien payoffs and proration entries. Ensure that proration of taxes and HOA dues is correct.
If co-owners disagree, consider a partition action or negotiations mediated through a lawyer. In court, you can ask for an accounting and credits for necessary payments that preserved the property.
Consult a Nevada real estate attorney early if the amounts are large, the ownership is unclear, or a partition/divorce is pending.

Helpful Hints

Keep every receipt and bank record from the moment you start paying anything on the property.
Separate principal and interest on mortgage payments when accounting. Principal reduces debt and increases equity; interest generally does not.
Get lender payoff statements in writing before closing to confirm the precise lien payoff amount.
Ask the title company or closing agent for an estimated settlement statement ahead of closing to see how proceeds will be applied.
If you are a co-owner who plans to pay carrying costs, ask co-owners to sign an agreement creating a right to reimbursement or credit.
If you are negotiating a divorce settlement, involve family law counsel because community/separate property issues can change the analysis.
In a partition action, courts have discretion. Timely motion practice and good records improve your chances of getting credit.

Key Nevada statutes and resources

Partition actions (general rules): NRS Chapter 40 (Partition).
Mortgages and deeds of trust: NRS Chapter 107.
Divorce and property division: NRS Chapter 125.
Property tax rules and collection: NRS Chapter 361 (Property Taxes).

When to get legal help

Talk with a Nevada real estate or family law lawyer if:

The sums involved are significant and co-owners disagree.
There are multiple recorded liens or disputed lien priorities.
You need a partition action, quiet title or a settlement in divorce.
You lack clear documentation of payments you made and expect reimbursement.

Disclaimer: This article explains general principles under Nevada law for educational purposes only. It is not legal advice and does not create an attorney-client relationship. For advice about your specific situation, consult a licensed Nevada attorney.