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My partner and I jointly own and home and have a shared mortgage which we pay from a joint checking account we both contribute to. We have heard that we can decide how to split the interest claim on our taxes, so we'd like for me to take ALL of it this year as I am in a higher tax bracket. I can find nothing declarative about this in IRS literature. Does anyone know what is permissible in this situation? Thanks.
My understanding is that yes, you can split it, but not arbitrarily. It should in reality match up to who is making the payments. For example if you are splitting the mortgage payments 50/50 the deduction should be split that way. With a joint account I guess it isn't so obvious. Check out this google search for some info:
My understanding is that yes, you can split it, but not arbitrarily. It should in reality match up to who is making the payments. For example if you are splitting the mortgage payments 50/50 the deduction should be split that way. With a joint account I guess it isn't so obvious. Check out this google search for some info:
Yea - trust me, I have spent a lot of time with this on google. Opinions are all over the board. I am hoping for more than an opinion however. I wonder if there is anything definitive.
Yea - trust me, I have spent a lot of time with this on google. Opinions are all over the board. I am hoping for more than an opinion however. I wonder if there is anything definitive.
This seems relatively clear (as clear as IRS stuff can be) that you have to have paid the interest to get the deduction.
Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness.
In general if the IRS guidance is "loose" you do whatever benefits you the most. An example of this is if you own a small business and have a cell phone plan, that you will occasionally/sometimes use for personal calls. All guidance I've had on this issue is to deduct the full value of the plan, and that trying to parse out the proportion of the bill that is "personal" related is next to impossible. Some will say this is against the code since it requires you to parse out personal calls and not deduct them, but in the real world given how cell phone plans are billed there is no real guidance on how to do this. That is a good example of "loose" guidance and doing what is best for you.
The answer I have gotten when asking people with stronger knowledge of taxes than myself is that the key is to provide a reasonable justification and have some kind of code that supports what you are doing. The IRS may not always agree, but at worst you will owe back taxes with a small amount of interest, in the pittance chance you actually get audited. A lot of the tax code was written a long time ago and it is not always 100% clear what you should do.
However, I don't really think this issue is particularly ambiguous, it is allowed, and as long as you aren't double counting the deduction and have ownership interest in the house, it is fine.
Have you tried calling the IRS and asking them? The last tax question I couldn't figure out I called them and they gave me an answer and the publication references that the answer came from.
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