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Discussion:MFS and mortgage interest

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Discussion Forum Index --> Advanced Tax Questions --> MFS and mortgage interest


Discussion Forum Index --> Tax Questions --> MFS and mortgage interest

Theresa d (talk|edits) said:

24 March 2009
Married couple file separate returns for tax savings. They own two houses. Per research each can only take the interest on one house unless they agree in writing that one spouse can take both houses. They are each taking one house. My question is-they pay the mortgages from a joint account. I know that when filing separately expense paid from a joint account are considered paid equally by each spouse. Does this impact on them each taking one house? i.e. they would each only get 1\2 of each house since paid from joint a\c?

Craigums (talk|edits) said:

21 March 2012
This is a good question. My research lead my to the same one. Any thoughts?

The only solution/fail safe I see is that if it's in writing, they don't have to follow this rule. So, have them pay half of each mortgage and OK it in writing with each other?

Tax Writer (talk|edits) said:

21 March 2012
Just have them sign a statement and put it in writing. I don't see any problem with that. It sounds almost like a partnership agreement, and it can probably be retroactive. Since the funds are joint anyway, then I would just maximize the tax savings to each taxpayer based on whatever allocation grants them the best benefit. We do this for unmarried (cohabiting couples) all the time.

Ddoshan (talk|edits) said:

21 March 2012
Separate returns. If you are married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. However, if you both consent in writing, then one spouse can take both the main home and a second home into account.

Sounds like each must take one house and or one could possibly take both if consent. But not allocate in any manner one sees fit.

Craigums (talk|edits) said:

21 March 2012
Ddoshan, don't you see some grey area here? And can you cite a source? The only (non-authoritative) source I've found (TaxBook) says with consent "one spouse can deduct interest from both homes". That doesn't preclude the other spouse from deducting interest from one or the other homes...

Tax Writer (talk|edits) said:

21 March 2012
But not allocate in any manner one sees fit.

I have had difficulty finding any tax authority either way. But I can't find anything in the code that specifically prohibits this type of allocation.

Theresa d (talk|edits) said:

22 March 2012
Do you just keep the statement in your file? With e file can't attach to return.

Craigums (talk|edits) said:

22 March 2012
Theresa, it doesn't say it needs to be attached. Yes, I'd keep it on file.

In my case, it turns out she didn't even pay for any of it!

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