Itemize or Not? The 2027 Standard Deduction After a NJ Divorce

The IRS announced on November 5, 2026, that the standard deduction for tax year 2027 will be $16,600 for single filers and for married people filing separately, and $33,200 for married people filing jointly. If your divorce is final by December 31, 2027, the spouse who keeps the house comes out ahead by itemizing only when the mortgage interest, the property taxes and their other itemized deductions add up to more than that. In New Jersey, the names on the deed can change the state deduction too.

I'm Dennis Mark Interdonato, a REALTOR® and Master CDRE® with The Dennis Mark Group at Keller Williams Realty Ocean Living. When one spouse keeps the house in a divorce, the tax side of that decision shifts every year, and the IRS posted the 2027 numbers last week.

Before anything else, here's where I stand. I'm a REALTOR®. I'm not a CPA, a tax preparer or a lender, and I'm not licensed to give tax, accounting or mortgage advice. This is my own reading of IRS and New Jersey Division of Taxation pages on November 11, 2026. I could be wrong, and these rules change, so bring it to your tax professional as a list of questions, not an answer.

What did the IRS announce for 2027?

In news release IR-2026-133, dated November 5, 2026, the IRS announced its yearly inflation adjustments for tax year 2027, with the details in Revenue Procedure 2026-35. The release says they generally apply to tax returns filed in 2028. The standard deduction amounts:

• Married filing jointly: $33,200, up $1,000 from 2026.
• Single: $16,600.
• Married filing separately: $16,600.

Which of those numbers will apply to you?

One date decides it, and that date is December 31. IRS Publication 504 says you're unmarried for the whole year if you have a final decree of divorce or separate maintenance by the last day of your tax year, under your state's law. Without one, you're married for the whole year, and the IRS says an interlocutory decree isn't a final decree.

A decree entered in December 2027 makes you unmarried for all of 2027. One entered in January 2028 leaves you married for 2027. More on that in who deducts the mortgage interest and property taxes the year you separate.

Will itemizing still pay for the spouse who keeps the house?

Itemizing helps only when your itemized deductions add up to more than your standard deduction. For an unmarried filer in 2027, the number to beat is $16,600. The mortgage interest and property taxes are the house's share of that list.

Two IRS limits go into that math:

• Mortgage debt. Publication 936 lets you deduct interest on the first $750,000 of home mortgage debt, or $375,000 if you're married filing separately. For debt taken on before December 16, 2017, the limits are $1 million and $500,000.
• State and local taxes. The 2025 edition of Publication 530 caps the deduction for state and local income, sales and property taxes at $40,000, or $20,000 married filing separately. It shrinks once modified adjusted gross income passes $500,000 ($250,000 filing separately). The 2027 announcement I read doesn't list a 2027 cap, so ask which figure applies.

If a buyout comes with a refinance, run the numbers on the new loan, not today's.

What changes while you're still married and filing separately?

Publication 504 has a rule worth knowing. If you and your spouse file separate returns and one of you itemizes, the other can't use the standard deduction and should itemize too. So if you're both still married on December 31, 2027, and the spouse in the house itemizes, the spouse who moved out can't take the $16,600 standard deduction.

That rule is written for married people filing separately. If the decree is final by year-end, ask your tax professional how each of you should file. The decree date belongs on your calendar next to the closing or buyout date.

Why does the deed matter on your New Jersey return?

New Jersey has its own property tax deduction or credit on the state return. The Division of Taxation says you can deduct your property taxes paid or $15,000, whichever is less, or take a refundable credit of $50, and you can claim only one of the two.

Here's the part to flag. The Division says that if you owned your main home with someone who was not your spouse, only the share of the property taxes that matches your percentage of ownership on the deed of record counts. It adds that the taxes must be apportioned even if only one of the owners lives there and pays all of the taxes.

As I read it, once the divorce is final, your former spouse is no longer your spouse for that rule. If both names are still on the deed, the one who lives there may be able to count only their share. Ask your tax professional, and ask your attorney when the deed will change. For the deed side, read the realty transfer fee on a transfer between spouses.

While you're still married, filing separately and living in the same home, the Division says only one-half of the property taxes due and paid can be used. For the spouse who rents, the Division counts 18% of the rent paid during the year as property taxes paid.

What should you gather before tax season?

• The date on your final decree, or the date your attorney expects it.
• Your lender's Form 1098 for the year.
• Your property tax bills and proof of who paid each one.
• A copy of your deed, so you know whose names are on title.
• The paperwork from a buyout refinance, if you had one.

Frequently Asked Questions

Our divorce will be final in 2027. Which standard deduction do I use?

If the final decree is entered by December 31, 2027, Publication 504 treats you as unmarried for all of 2027, and Revenue Procedure 2026-35 lists $16,600 for unmarried individuals. Your tax professional will confirm your filing status.

I'm keeping the house. Can the deed shrink my New Jersey deduction?

It can. With someone other than your spouse still on title, the Division of Taxation counts only your ownership share of the taxes, even if you pay every bill.

One more time, in other words: I read these rules as a REALTOR®, not a CPA or a lender. I could have it wrong, and the numbers move every year, so let your tax professional run your 2027 return before you count on a deduction. If you're still deciding whether keeping the house makes sense, start with a neutral home value both of you can see, then read how a spouse buyout works in New Jersey.

This is general information, not legal, tax, accounting or lending advice. Sources: IRS news release IR-2026-133 and Revenue Procedure 2026-35 (November 5, 2026); the 2025 editions of IRS Publications 504, 530 and 936, posted when I read them on November 11, 2026; and the Division of Taxation's property tax deduction page, last updated March 23, 2026.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• Read the divorce home sale guide
• How the capital gains exclusion works in a New Jersey divorce
• NJ property tax quarters when you're selling the marital home
• Have a question this didn't answer? Send it to Dennis Mark.