Short answer

In Massachusetts, a co-owner who pays mortgage payments, property taxes, insurance, or other carrying costs is not automatically entitled to deduct those payments from the sale proceeds unless the co-owners agreed otherwise or a court (in a partition or accounting action) orders a credit or contribution. However, courts commonly allow an equitable credit or right of contribution when one co-owner has paid more than their fair share for the benefit of the property. Payments that reduce mortgage principal usually increase that payer’s equity; interest and carrying costs are treated differently and often require a court accounting to allocate fairly.

Detailed answer — how Massachusetts law treats these payments

This answer assumes co-ownership as tenants in common or joint tenants (most common situations where people split sale proceeds). If the ownership arises from a divorce, trust, probate, or another special circumstance, different rules and courts may apply.

Basic principles

• Each co-owner generally owns a proportionate share of the property (for example, 50/50), and benefits and burdens are shared accordingly unless the owners agree otherwise in writing.
• If one owner pays something that benefits the whole property (mortgage principal, property taxes, insurance, repairs), that owner can typically seek reimbursement or contribution from the other owners for the nonpaid share.
• The lender’s mortgage terms are separate from the internal accounting between owners. If the mortgage names both co-owners, both remain liable to the lender regardless of internal agreements.
• Absent a contract, the remedy for disputes among co-owners is usually an equitable accounting or a partition action in court. A court can order a sale, divide proceeds, and allocate equitable credits or debits for contributions and expenses.

How different payments are commonly treated

• Payments toward mortgage principal: These payments increase the property’s equity. If one co-owner alone makes extra principal payments, courts typically recognize that increased equity and may give that payer credit in a partition accounting or buyout calculation.
• Mortgage interest: Interest payments are usually considered carrying costs rather than equity-building payments. Courts may allow contribution for interest only to the extent that other co-owners benefited and did not pay their share, but interest is less likely to be treated as an equity-enhancing payment than principal.
• Property taxes and insurance: These are necessary carrying costs. A co-owner who pays them may seek reimbursement or contribution. Courts will examine whether the payment benefited all owners and whether the payer was forced to pay to protect the property (e.g., to avoid tax liens).
• Repairs and improvements: Repairs that preserve the property’s value are typically reimbursable or shared. Major improvements that increase value may give the paying owner a claim for increased equity, but courts balance the benefit and may not allow full reimbursement if the improvements disproportionately favored the payer.

When a court will intervene

If co-owners cannot agree, one owner may file for an accounting or a partition action. In Massachusetts, a court handling a partition or accounting will:

1. determine each owner’s legal interest in the property;
2. require an accounting of payments (mortgage principal, taxes, insurance, repairs, and payments to preserve the property); and
3. allocate credits and debits so each owner receives a fair share of the proceeds after paying off liens and closing costs.

Note: You cannot unilaterally deduct amounts from sale proceeds at closing unless the buyers/lender and the other co-owners agree. To obtain a legal credit, you generally need either a written agreement, a stipulation at closing signed by all owners, or a court order.

Practical considerations and examples

Example (simple): Two co-owners own 50/50. Sale price: $300,000. Mortgage balance at closing: $100,000. One owner made extra principal payments of $10,000 and paid $2,000 of taxes and $1,000 of insurance during ownership while the other paid nothing.

How this typically plays out:

• At closing the lender is paid the $100,000 mortgage balance. The extra $10,000 of principal payments already increased the payer’s share of equity — the payer can claim that this additional equity should be accounted for in the split.
• The $2,000 taxes and $1,000 insurance are carrying costs. The payer can seek contribution from the other owner for their 50% share via an agreement or a court accounting. A court may award reimbursement or offset part of the other owner’s share of proceeds.
• Net distribution will reflect the mortgage payoff, closing costs, and any credits or reimbursements the court orders after an accounting.

What you can do now to protect yourself

• Keep detailed records: canceled checks, bank statements, mortgage statements showing principal vs. interest, receipts for taxes, insurance, and repairs, and any written communications with co-owners about payments.
• Get agreements in writing: a written co-ownership agreement or promissory note specifying how payments are allocated prevents disputes.
• Consider a formal accounting early: demand an accounting in writing if a co-owner is not cooperating.
• Before selling, try to reach a signed agreement on how to divide proceeds, or have the property refinanced in the paying party’s name if possible and agreed.
• If you expect disputes, consult a Massachusetts real estate attorney promptly — they can prepare an agreement, negotiate a buyout, or file a partition/accounting and present your credits to the court.

Helpful hints

• Document every payment and categorize it (principal vs. interest, tax, insurance, repair, improvement).
• Ask the lender for an amortization breakdown when you make mortgage payments so you can show how much went to principal.
• If co-owners disagree, propose mediation or a neutral accounting before filing court papers — it’s usually faster and cheaper.
• If you pay to prevent a tax sale or lien, notify the other co-owners in writing and keep proof — courts often view those payments as necessary and reimbursable.
• Do not assume payments you make for the property will automatically increase your share on sale — get agreement or be prepared to seek a court order.
• Talk with a real estate attorney in Massachusetts for a written estimate of what you can reasonably expect to recover based on your records.