Discussion:Married mortgage interest deduction
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Discussion Forum Index --> Tax Questions --> Married mortgage interest deduction
| 3 April 2007 | |
| My spouse and I filed for divorce in 2006. The divorce is not yet final, this is april 2007.
We received a 1098 from the mortgage company in both names. We do not have any type of written agreement on how to split the interest deduction. Does this mean that in leiu of any written agreement we must split the deduction 50-50, regardless of who paid more towards the mortgage? | |
| April 3, 2007 | |
| Split the mortgage interest based on the proration of each of your incomes divided by the total income. | |
| 3 April 2007 | |
| I also believe that whichever taxpayer isn't the primary social security number on the 1098 should attach an explanation statement to the IRS. I had the IRS send a notice to a client for deducting mortgage interest that there were co-borrower on, but not the primary social security. | |
| 3 April 2007 | |
| The mortgage is deducted by the spouse who actually paid the mortgage. The deduction for interest paid out of community property funds is split 50-50. If paid out of a joint account that is not community property, and you are not able to determine who provided the funds for a particular mortgage payment, then you should split that payment 50-50. | |
| 3 April 2007 | |
Somewhat related follow-up: Does a taxpayer have to be the owner of the home in order to deduct mortgage interest? The IRS pub is ambiguous; at some places it just says that the mortgage holder must be legally liable and that the mortgage must be secured by the mortgageholder's home (or second home). At others it says -- or implies -- that the mortgage holder must own the home. This has come up for me twice: Once with an unmarried couple: He owned the house, she held the mortgage. Now I have a married couple, filing separately (becuase she doesn't want to get stuck with his financial mess): House is in his name, mortgage is in her name (he's got lousy credit). Damned if I know how either of these folks got a mortgage on a house they don't own! but the mortgage does seem to be secured by the house. (I've seen the 1098 in just her name, and the title, in just his, but not the mortgage papers -- I assume he had to sign to pledge the house as security.)
As to who paid, I think in the first case they had joint funds, and I'll find out about the second. But does it really matter? He presumably is not eligible to deduct because he's not legally obligated, so if he pays isn't that just like a gift to his wife -- ie, her money? If not, I'll tell him to run the money through her account. | |
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