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Other Deduction Questions

Question: My housemate and I, both the legal owners of our house, pay mortgage expenses from our joint account. The monthly expense also covers the real estate taxes on our home. The Form 1098 and property tax statement only have my name and social security number. How do we split these payments of interest and taxes on Schedule A so we can both claim our share on our separate tax returns?

Answer:

To deduct taxes or interest on Schedule A (Form 1040), Itemized Deductions, you generally must be legally obligated to pay the expense and must have paid the expense during the year. Even though two unmarried individuals can both be the legal owners of the home and pay the mortgage equally or from common funds, the lender normally sends out only one Form 1098, Mortgage Interest Statement. Additionally, the local taxing authority may also only provide a receipt in one taxpayer's name.

As long as you're not both deducting the same expense, you can both take a deduction of the expenses. Determine the proportionate share of the deductions based upon all facts and circumstances. Apply the $1 million limit on acquisition indebtedness and the $100,000 limit on home equity indebtedness to the qualified residence or residences if you're married and filing jointly, or $500,000 on acquisition indebtedness and $50,000 on home equity indebtedness if you're married and filing separately. If you're unmarried and pay mortgage interest on the qualified residence, the $1 million limit on acquisition indebtedness and $100,000 limit on home equity indebtedness are applied per taxpayer.

If each taxpayer paid one-half of the expenses, then each Schedule A should reflect one-half as deductions. Both of you should attach a statement to your Schedules A explaining how you're dividing the mortgage interest and payments of real estate taxes. Your housemate, who didn't receive the Form 1098, must list the mortgage interest he or she paid on line 11, "Home mortgage interest not reported to you on Form 1098" of Schedule A.

Please keep your records on your split of the deductions for the mandatory review period (statute of limitations) since the information reported won't match the records submitted to the IRS.


Category: Itemized Deductions, Standard Deduction
Subcategory: Other Deduction Questions

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
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