Discussion:Mortgage Interest/Living Together
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Discussion Forum Index --> Tax Questions --> Mortgage Interest/Living Together
| 3 January 2006 | |
| Can someone point me to some guidance on how to properly account for itemized deduction, i.e. real estate taxes and mortgage interest when a couple live together......Thanks | |
| 3 January 2006 | |
| Are both parties on the loan? If they are, by letter, ask the mortgage company to put both SSN's on the 1098...the percentage of deduction can then be split as needed on the tax return.
If not, the 1098 will show the SSN of the party on the loan...this is the only one that can take the deduction anuenue | |
| 3 January 2006 | |
| Mortgage interest does not have to be in both party names. An "equitable owner" works too. See Saffet Uslu, et ux., TC Memo 1997-551. Interest paid on the taxpayer's indirect debt obligation combined with equitable and beneficial ownership of the residence may be deductible (Uslu). Here, taxpayers were unable to obtain a mortgage due to their poor credit rating. A related party obtained a mortgage and held title to the taxpayer's home. The taxpayer made all the mortgage payments and bore all economic responsibilities of owning the home, which was the primary residence.
However, real estate taxes do require that each be legally obligated to pay the tax. Real estate taxes generally can be deducted only by the taxpayer on whom the tax is imposed (i.e., the individual who has legal title for property taxes). See IRC 164(a) and related TRegs. In essence, there are 2 different rules: For the mortgage interest, you can split. For the real estate taxes, you probably will only get the deduction for the party listed on the legal title. The SSN of the 1098 does not necessarily limit who gets the deduction. Although having both listed on the 1098 might avoid IRS inquiry if you choose to split both expenses. | |
| 3 January 2006 | |
| As indicated above, as long as the taxpayer is either the legal or equitable owner of the property, there should be no problem with deducting the actual amount paid by each taxpayer. If they co-mingle their funds, it may be difficult to determine each owner's contribution to the mortgage payment. | |
| 5 January 2006 | |
| Probably best to follow Pub. 936 instructions and attach a statement to the return or 8453 showing how much each paid and include the name and address of the one who received the 1098. | |
| 10 February 2006 | |
| I follow that two or more can split a mortgage interest deduction. Can someone point to it in the code? I haven't been able to find it there. | |
| 10 February 2006 | |
| I have a lot of domestic partnerships where the partners split the interest and taxes - I include a statement on the return if one of the partners is not listed on the mortgage statement - stating that the partner is 50% owner of property with the other partner, and I list the name and social of the other partner.
Been doing this for years with no problem | |
| 10 February 2006 | |
| Skyhyatt, the code doesn’t really say that.
Mortgage interest can be claimed by a joint owner under the general principles of Regulation § 1.163-1(b) to the extent that he can prove that he actually paid these amounts. | |
| 11 February 2006 | |
| I have this very situation from a new client. She lives with her mate, and she is not on the mortgage due to credit issues. They both own the home, and they share the payments. My question: How much proof does she need to satisfy the IRS?..........Thanks, ....Mike | |
| 11 February 2006 | |
| She needs to prove 2 things: 1) She is either the equitable or legal owner; and 2) the amount of her contribution to the mortgage payments. If she is on title, then item 1 is easy. If not, she will need to prove that she has all the "burdens and benefits" of home ownership. | |
| 7 October 2006 | |
| I've purchased a home jointly with my brother. We are both listed on the mortgage and title. I make a good deal more money than he does. Can I deduct the full amount of the interest paid on the loan from my taxes (preferred since the total tax savings would be greater) or are we required to split the interest deduction 50/50? | |
| 7 October 2006 | |
| The deduction is for interest paid. If you pay 100% of the mortgage, you are entitled to 100% of the deduction. But if you each pay 50%, you cannot deduct more that what you have paid. | |
Death&Taxes (talk|edits) said: | 7 October 2006 |
| It might also depend on how the property is titled. Someone will correct me if I am wrong, but if you own as Tenants in Common you are only entitled to half of the interest. If you pay the entire debt, you have made a gift to your brother. | |
| 1 February 2007 | |
| I have a client with a similar situation. She is on title not on loan. She has paid mortgage on the loan and has canceled checks to prove it.
Where on the tax return will this deduction get reported since she does not receive a 1098 from the lender? | |
| February 1, 2007 | |
| On Sch A, as normal, but attach a note listing whose name and SS# is on the 1098 form. | |
| 6 February 2007 | |
| My situation is this: Both my DP and myself are on the title and the mortgage. The 1098 lists both of our names, but only his SSN. In the past, my DP has taken the full deduction as he was the only one itemizing deductions due to his much higher income. This past year, I made quite a bit more and was hoping to take the full mortgage interest deduction, as I will be itemizing instead of him. Our checking account is joint, and our mortgage payment is automatically deducted each month. So the question is: Can I do this? I know I need to write a letter, but can I take 100% of this deduction, or am I better off just sticking with my DP taking the full deduction. If I itemize, we will be getting back an additional $650(which is a lot for us). | |
Suresh vankadaru (talk|edits) said: | 1 June 2007 |
| I GOT 1098 IN THE NAME OF MY CO-OWNER AND I WANT TO CLAIM IN MY TAX RETURN.MY CO OWNER RESIDES IN THAT PREMISES AND I RESIDE IN RENTED PREMISES
WHETHER I CAN CLIAM MORTAGE INTEREST AND REAL ESTATE TAXES PAID ON IT IN MY RETURN | |
| 1 June 2007 | |
| Suresh, you may deduct the portion that you pay if it is either your primary or second residence; or if it is a rental, you may claim the portion that you pay against the rental income. Alternatively, if it is neither a rental nor a primary or second residence, you may have investment interest or personal interest. You may want to seek the help of a tax professional if your situation is complex. | |
Seattlemojo (talk|edits) said: | 15 July 2007 |
| what constitutes Beneficial ownership?
Does monetary consideration need to be exchanged? If person "A" owns the home (subject to a mortgage) and person "B" moves in and helps to pay the mortgage as well as its share of the utilities and upkeep on the home - though "B" has no financial obligation nor equity, can "B" still claim its proportional share of the interst payments on their ("B"'s) income tax as a deduction on Schd A. "A" and "B" are unmarried , and "B" is not on either the Mortg or the Deed | |
| 15 August 2007 | |
| I am looking into purchasing a home with my mom. She has the funds for a down payment while I will have the higher salary for mortgage payments.
Is there a way to keep it flexible as to who takes what percent of the interest deduction? How would one suggest to set this up? | |
| 29 February 2008 | |
| OK. I agree that the interest can be split. But what is the limit on the amount of debt that can be deducted? Does each partner get $1.1 million? | |
| 29 February 2008 | |
| $1 million debt is the tax return limit for MFJ. MFS half of that. In case of two single owners, each paying interest, you could have $2MM debt interest being deducted. | |
Madtowner11 (talk|edits) said: | 3 March 2008 |
| My gf and I bought a house last year and we both wrote montly checks to the lender (although my payments are much larger than my gf's). Both our names are on the deed and the loan. Only my name is on the 1098 mortgage interest statement (or is it the 1099? I get them confused). I basically wanted to be the traditional male provider and make all of the house payments myself, but she makes payments to give us more money between paychecks. I basically pay her back her payment by buying all of the groceries and paying all of the utilities.
I plan to claim all of the mortgage interest on my taxes and she plans to claim none. The only question that I could see the IRS asking is: Why did she write checks to the lenders every month? As I said, I pay her back (we didn't want a case where I made the full payment each month and then she gave me money directly because I'd have to report that as income, wouldn't I?). So my basic question is: Am I going to get in trouble if I claim all the interest? I know it's legit, and it's certainly not like we're both trying to claim the mortgage interest, so I think we're ok... | |
Ken@seamann.com (talk|edits) said: | 3 March 2008 |
| She has proof she made those payments. YOU DO NOT!!! Pretty simple.
Also, for those of you that are on title but the mortgage 1098 only shows the others SS#, put the interest on the line says that there wasn't a 1098. This will eliminate a CP2000 letter usually. | |
| 30 March 2008 | |
| Hello Almanacers!
Here is another question. What would you do in this case? Domestic partners, both in title, both in mortgage, spliting deductions 50% each. I have reviewed their retuns and I found out that they both own rental property. One doens't have much income, and after the rental losses she doesn't have to pay taxes. Therefore her 1/2 of rental losses evaporates. The other one have high income, so she is actually the one paying the bills (joint checking account too). Even if she can only deduct up to $25k she could carry-over the loss for when they sell the property. I am thinking on doing amended returns (04-06) to fix this and make the one with the high income claim the sch A mortgage/prop tax and sch E deductions. My question is: Do you see any reason why I shouldn't amend the returns? Do you think that the IRS and CA will agree with my possition? THANK YOU! | |
Confusedinoregon (talk|edits) said: | 8 June 2008 |
| Hi, I really need some help. My parents were selling their home and we decided we wanted to purchase it in the future. I became disabled and this seemed like the best option since living in the bay area on one income was a little difficult. The problem is that we needed a little more time to get the loan. We have been paying the mortgage payments. Their account said that we could take the mortgage interest deduction. I am wondering if she is correct in this statement? We are not on the loan, nor are we on the title. Is what she is saying true? If not how can we claim the deduction without actually starting the loan right now? The reason we waited was because all the credit cards have become "maxed" since I was not working and we only had the one income. This is the only negative thing on our credit, but it is huge against our credit score. Please, don't judge us for the credit situation, when you have 2 good incomes and suddenly have one, it was very difficult. I really would appreciate any advice on how we can claim this deduction. Thank you so much in advance for any help I can get!!! | |
| 8 June 2008 | |
| If you can qualify as an "equitable owner" as described up above and you are making the mortgage payments, it should be no problem.
K, here is a twist. GF/BF own house together. They open a joint bank account and there is a lot of money sitting in the account. More than enough put in by both that 100% of mortgage payments and taxes could have been covered by both parties individually. They pay mortgage out of this account and the taxes - both are on the deed. This theoretically would allow them to "legally" split the interest and taxes in any manner they wish. Correct? | |
Confusedinoregon (talk|edits) said: | 9 June 2008 |
| Sorry, I meant to say their accountant said it would not be a problem | |
Confusedinoregon (talk|edits) said: | 9 June 2008 |
| Can you please expand on how to qualify as an equitable owner? I did read what was above, but am asking for a little more info. I have been doing other research and I am finding a lot on foreigners as equitable owners, but not my situation. Thanks again for your help! I have been told so many different things, I just want a better understanding. | |
| 9 June 2008 | |
| I think that you need a local acct to help you. If your name is not on the deed, you don't own the house. | |
| 9 June 2008 | |
| An equitable owner can deduct the interest without being named on the deed or mortgage loan.
An equitable owner is a person who has assumed the benefits and burdens (insurance, taxes, repairs, etc.) and who could demand title to the property by paying off the encumbrances against the property. | |
