Can I include mortgage, property taxes, and other carrying costs I paid in my share of the sale proceeds?

Short answer: Possibly — but it depends on the legal context (divorce, co-ownership/partition, or a contractual buyout), the source of the payments, what title or agreements say, and how Arkansas courts treat equitable adjustments. You need records and a clear accounting to support any claim for credit.

What situations matter under Arkansas law?

The most common situations where someone asks this question in Arkansas are:

Divorce (division of marital property).
Partition or sale between nonmarital co-owners (friends, relatives, business partners).
Buyouts under a written agreement (e.g., a buy-sell or co-ownership agreement).

How Arkansas courts generally approach these claims

Arkansas follows equitable principles for dividing property in divorce and for resolving disputes among co-owners. That means a court will look at fairness and the parties’ contributions rather than follow a strict formula. Key considerations include:

Whose money paid the mortgage, taxes, insurance, and upkeep? (marital funds, one spouse’s separate funds, or payment on behalf of the other)
Was there an agreement—written or oral—about who would be reimbursed for carrying costs?
Did payments preserve or increase the property’s value (e.g., repairs and improvements) or simply maintain it?
Who held title and what did the title and deed say about ownership interests?
Are there tax or lender consequences tied to who claimed mortgage interest or property tax deductions?

Divorce context (equitable distribution)

In a divorce, Arkansas courts divide marital property equitably. Courts consider contributions by each spouse, including direct payments for mortgage, property taxes, insurance, and maintenance. A spouse who paid carrying costs from separate funds or who paid a larger share of household expenses may ask the court for an offset or reimbursement in the property division.

That said, courts also weigh other factors such as length of the marriage, the economic circumstances of each spouse, and whether the payments were meant to preserve marital property for both parties. The result can be a credit for one spouse, an adjusted split of sale proceeds, or another equitable remedy. For the statutory framework governing divorce and property, see the Arkansas Code on family law (Title 9): https://www.arkleg.state.ar.us/ (search “Title 9” and the family law provisions for the most relevant sections).

Co-ownership or partition actions

When two or more nonmarital owners sell jointly owned property or one owner seeks partition, Arkansas courts allow an accounting of contributions. A co-owner who can document mortgage payments, property taxes, insurance, or necessary repairs may receive credit against the proceeds before the remaining proceeds are divided according to ownership shares. However, credits are not automatic. The court will consider whether payments were for the benefit of all owners, whether they were voluntary, and whether they were documented.

Buyout agreements and contracts

If a written agreement governs sale or buyout, follow it. Many co-ownership agreements or separation agreements in divorces specify whether carrying costs count toward a party’s share. Clear contract language typically controls unless a court finds the agreement unconscionable or invalid.

Evidence you need to make a credible claim

To convince a court or the other party that you should receive credit for carrying costs, collect:

Mortgage payment history and bank statements showing who paid each installment.
Receipts or cancelled checks for property taxes, insurance, utilities, and repairs.
Tax returns that show mortgage interest or property tax deductions and who claimed them.
A current appraisal or broker price opinion to establish value at sale and at earlier dates (if you claim improvements increased value).
Any written agreements or communications about who would be reimbursed for payments.

Common outcomes and examples (hypothetical)

Example 1 — Divorce: Spouse A paid the mortgage and property taxes for three years from a separate inheritance while both spouses lived in the house. At sale, the court may give Spouse A a credit for the documented separate funds used to preserve the property before dividing the remaining proceeds equitably.

Example 2 — Co-owners: Two siblings own a rental property; one paid all taxes, insurance, and mortgage for several years without reimbursement. In a partition or accounting action, a court can order reimbursement or offset those payments against that sibling’s share of the sale proceeds.

Example 3 — No documentation: If neither party has records and payments are disputed, a court may decline to award credits or may estimate contributions, often leading to a less favorable outcome for the claimant.

Tax and lender issues to consider

Who claimed mortgage interest or tax deductions can affect the tax consequences of the sale and who benefits from prior payments.
Payoff of the mortgage at closing can satisfy lender interests; reimbursements usually come from the remaining sale proceeds after payoff unless parties agree otherwise.

Practical steps to protect your position

Keep careful records of every payment and receipt related to the property.
Get a written agreement if you and the co-owner can negotiate reimbursement terms.
Obtain a current appraisal before sale or buyout to document value.
Consider mediation to reach a negotiated accounting and avoid litigation costs.
Consult a local Arkansas attorney who handles divorce, partition, or real property disputes for case-specific advice and to prepare documentation.

Helpful Hints

Document everything now—bank records and receipts matter more than memories.
Separate account payments (inheritance, personal savings) are easier to credit than pooled household payments.
Get an appraisal to support claims that repairs increased property value.
Ask for a written settlement or stipulation before you close—clarify reimbursements and distributions in writing.
Check who claimed mortgage interest and property taxes on past returns—this can affect tax outcomes and credibility.
If you’re in a divorce, remember courts apply equitable distribution—an exact dollar-for-dollar reimbursement isn’t guaranteed.

Where to look in Arkansas law

Arkansas courts apply equitable-consideration principles to marital property division and to disputes between co-owners. For the statutory framework governing family law and divorce matters, search Title 9 of the Arkansas Code on the Arkansas General Assembly website: https://www.arkleg.state.ar.us/ (select “Arkansas Code” and then Title 9 for family law provisions). For procedural rules about partition or civil accounting, review the civil procedure and real property chapters on the same site.

Disclaimer: This article is for general information only and is not legal advice. It does not create an attorney-client relationship. For advice about your specific facts in Arkansas, consult a licensed Arkansas attorney.