Taxpayer Hell Edition II: Joint Ownership

by Alex Stenback on March 17, 2005

Bus_tax_1Tax day looms, which means its green eyeshade time again.  Chills Yet?  This one might seem obvious, but we get the following question, or something like it, a lot:

"I own a property jointly with another person – we both live in the house, and share in the payments and expenses.  Who gets to deduct the interest?"

The answer to this hinges on the difference between the terms owner and borrower. Only those liable for the mortgage [Borrowers whose name(s) are on the loan] are able to deduct the interest.  If you are simply an owner, and not liable for the mortgage, then you cannot deduct mortgage interest, even if you pay all, or any part of the payment (spouses filing jointly are obviously an exception.)

More on this and other joint ownership/tax minutiae after the jump [click below]

More on Joint Ownership:

  • If there is more than one borrower, they both may deduct their equal share, even if the interest statement is only addressed to one of the borrowers. 
  • 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.

Source: IRS PUBLICATION 936

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