Claiming the home mortgage interest deduction can make a big difference when filing your income taxes. But questions about who gets to claim this tax break often arise when two people pay the mortgage, especially when they aren't married or will file separate tax returns. Fortunately the Internal Revenue Service offers some guidance on this slightly fuzzy area of the tax code.
Follow the Money
One of the basic rules of income taxes is that the person paying the expense gets the deduction, and the home mortgage interest deduction is no exception. If you and another person pay the mortgage, you can each take a deduction only for the amount of mortgage interest that you actually pay, assuming you meet the other requirements. For example if the total mortgage payments for the year are $10,000, and you pay only $4,000, you can deduct only 40 percent of the mortgage interest, even if the other person agrees to let you claim his portion. This applies not only to unmarried individuals, but to married couples who file separate returns.
Restrictions
The Internal Revenue Service limits your eligibility to take a mortgage interest deduction to a primary residence and one second home. You must have an ownership interest in the home and a legal responsibility to pay the mortgage before you can claim the deduction. If you are paying someone else's mortgage, and you don't have an ownership interest in the home, you can't take the deduction.
Mortgage Statement
Even if more than one person signs a mortgage, banks will usually issue only one 1098 mortgage interest statement, generally to the first person named on the mortgage document. As far as the IRS knows, only one person paid the entire amount of mortgage interest.
Schedule A
When filling out Schedule A, the person who received the 1098 should enter her share of the deduction on line 10 of her Schedule A. The person who did not get the 1098 should enter his share of the deduction on line 11 of his Schedule A, and write "see attached" next to the line. The second person should attach a statement that details how much interest was paid by each person, and it should state the name and address of the person who received the 1098.
References
- IRS: Publication 936, Home Mortgage Interest Deduction
- IRS: Instructions for Schedule A
- Internal Revenue Service. "Be Tax Ready – understanding tax reform changes affecting individuals and families." Accessed July 13, 2020.
- U.S. Congress, Joint Committee on Taxation. "Overview Of The Federal Tax System As In Effect For 2018," Pages 4, 36, Download "JCX-3-18." Accessed July 13, 2020.
- Federal Reserve Bank of New York. "Household Debt and Credit Report (Q3 2019)." Page 4 Data. Accessed July 13, 2020.
- Internal Revenue Service. "Topic No. 501 Should I Itemize?" Accessed July 13, 2020.
- Internal Revenue Service. "IRS provides tax inflation adjustments for tax year 2020." Accessed July 13, 2020.
- Internal Revenue Service. "Filing Season Statistics for Week Ending November 23, 2018." Accessed July 13, 2020.
- U.S. Congress, Joint Committee on Taxation. "Overview Of The Federal Tax System As In Effect For 2019," Page 36, Download "JCX-9-19." Accessed July 13, 2020.
- Internal Revenue Service. "Publication 936 (2019), Home Mortgage Interest Deduction." Accessed July 13, 2020.
Writer Bio
Alan Sembera began writing for local newspapers in Texas and Louisiana. His professional career includes stints as a computer tech, information editor and income tax preparer. Sembera now writes full time about business and technology. He holds a Bachelor of Arts in journalism from Texas A&M University.