Hello there, I’m going to get married this year and each of us own houses. I’m curious if there’s going to be any tax penalties for us both being homeowners and if it will prevent us from being able to claim homestead on both properties since we don’t live together?
Here's what I can provide, and I'm making a few assumptions here.
"We don't live together"
But you will be living together after you're married I assume.
Generally, it is best for a married couple to file a joint tax return. There is no situation where it is more tax advantageous for a married couple to file separate returns. Ever. Your filing status is determined by your marital status on Dec 31 of the tax year. So if on Dec 31 of 2018 your status is married, your only two filing choices are Married Filing Separate (the most costly way to file tax-wise) or Married Filing Joint.
Will you be selling one of the houses after marriage and both of you living in the other house? Or will you convert one of the houses to a rental and rent it out?
"claim homestead on both properties "
That's a property tax thing, not an income tax thing. Generally, one's declared homestead in a county is allowed to reduce the "taxable value" of their primary residence by a set amount, which in turn reduces the property taxes. Weather you can claim that for both properties depends directly on how your property tax assessor's office looks at it. So you will need to seek that information from the local property tax assessor's office in the taxing jurisdiction where each house is located.
For example, in my county where I live, I own four houses. However, the state says I can only have one homestead, and the rule is that house *MUST* have been my primary residence on Jan 1 of the tax year. So when I purchased my 4th house and moved into it in Feb of 2003, I could not claim homestead on my newly purchased house because it was not my primary residence on Jan 1 of 2003.
Now the house I moved out of, I converted to rental property. That house was my primary residence on Jan 1 of 2003 and therefore I was able to claim homestead on it. Now had I sold that house in 2003, I would not have been able to claim a homestead exemption for that specific year on "any" house I owned, since I did not own the house I lived in on Jan 1, 2003, when my property taxes were assessed on Nov 1 of that same year.