Discussion:Not married and own a house together
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Discussion Forum Index --> Tax Questions --> Not married and own a house together
| 4 January 2007 | |
| Hi,
I am new in the field and have a question. I have two clients who own a home together but are not married. How would I do their mortgage interest deduction? Would they just split it? If one could not itemized because of lack of other expenses could the other client take the whole thing? I am at a loss. | |
| 4 January 2007 | |
| Taxpayer can only deduct amount actually paid. If partner A pays half then he/she can only deduct half. Form 1098 is sent with one of the two partners SSN, so other partner would list interest deduction on line 11 of Sched A and explain situation. | |
| 4 January 2007 | |
| Alright I see what you are saying. They share a bank account and all of their paychecks go into it and all of the bills come out. Their money is co-mingled. Both are listed on the loan with their bank. | |
Djlworld-tax (talk|edits) said: | 4 January 2007 |
| Actually, they can only split the deduction for the mortgage interest and taxes if both their names are on the deed and the loan. Only the parties that are legally titled on the deed can deduct those expenses. | |
| 4 January 2007 | |
| i agree - only those on title can take the deduction. i have a client who makes the mortgage payment on a house that he lives in but his sister is the only one on title. she prepares her t/r taking the mtg int and then recomputes her tax return without it - the sister and my client then exchange a check repaying my client for the tax savings she rec'd on her t/r. | |
| 5 January 2007 | |
| I disagree with the requirement of being on the title. It is my understanding that if you have equity ownership and pay mortgage interest then potentially you can deduct the mortgage client paid. Equity ownership being a document or some other evidence to show one has ownership rights. This is just off memory and requires further discussion. | |
| 5 January 2007 | |
| Ok so they are both on everything. They own the house with joint tenancy with right of survivor. Both are on the deed, loan, homestead exemption papers, and homeowner insurance. They share a joint checking account in which all income is deposited and all bills are paid. What do they do? | |
| 5 January 2007 | |
| 50/50 as JR1 said. If one can not itemize, that is unfortunate. The other one is not entitled to all of it. | |
| 5 January 2007 | |
| To change the deduction proportions from 50/50 I think that one partner could gift their share of the money used to make the payments to the other. I would advise that they have an written agreement to that effect.
Also, I have seen articles that suggested that the deductions be divided according to the relative amounts of money that each partner deposited into the joint account. -- Larry Hess, CPA, Albuquerque, NM - Talk to me | |
| 5 January 2007 | |
| In order for both of you to claim one-half of the interest deduction, both of you must be legally liable for the loan. According to you " both are on everything". Since both of you are legal owners of the property, both of you may deduct one-half of the real estate taxes paid during the year. For more information, refer to Publication 936, Home Mortgage Interest Deduction; | |
| January 5, 2007 | |
| You might want to check out this Tax Almanac article and links to similar discussions: Equitable_or_Beneficial_Ownership | |
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