My partner and I purchased our first home in 2022. We are unmarried. Does a married couple post-purchasing a home benefit more than an unmarried couple in 2022?

Forum|Forum|3 years ago
November 29, 2022
7 replies
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My partner makes more than I do. We both work full time and have no children. Paying bills/mortgage 50/50.

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Best answer by Hal_Al

Expert Reviewed

Yes, it is tied to how much each of you contributed to the account and which portion of what you contributed directly went to the mortgage. You can only claim the interest you actually paid.

For example, if you put $1,000 in the account a month and they put $1,500 in the account every month, and your mortgage is $1,000 per month, you both could reasonably be paying 50% of the mortgage. If one person is putting $250 while the other is putting $1,500, then obviously the person putting more than enough for the mortgage in, would claim more of the mortgage than the other person. In general, if you are unmarried and are both contributing enough to cover the mortgage, then you would claim 50/50

Q. If the mortgage for an unmarried couple is paid out of a joint bank account, doesn't the split have to be in proportion to their payments into that account?

A. No.

Q. If coming from a joint account, I assume that would be tied back to how much each person contributed to that joint account.

A. Yes. Using @Vanessa A 's example, the mortgage payment was $1000. You put $1000 into that account. The two of you are allowed to agree that it was your $1000 that went for the mortgage payment

Q. I would like to be able to assign all mortgage interest to the higher earner as an itemized deduction and use the standard deduction for the lower earner, but I don't think that is legit.

A. It is legit, as long as you contributed enough money to pay what you claim.

Critter-3

Level 15

Best option ... only ONE person should claim all the interest/re taxes on their return Sch A and the other person uses the standard deduction ... that way you both benefit and is usually the best option ( higher income uses the Sch A for the best result). Otherwise you each use the standard deduction or claim the Sch A deductions you actual paid for... which ever if better for each person.

TomD8

Alumni - Champ

Here's one area where you're potentially penalized for marrying and filing jointly: the itemized deduction for state and local taxes (SALT) is limited to $10,000 for both single taxpayers and for those filing married jointly. So if you have real estate & local income taxes exceeding $10,000, the advantage clearly goes to remaining single as opposed to marrying and filing jointly - since by filing as single you can each deduct up to $10,000 of SALT.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Carl

Level 11

Based on your post, I take it that you are still NOT married to this day.

My partner and I purchased our first home in 2022. We are unmarried.

Congrats! That's the biggest financial step you'll take in your entire life most likely.

Does a married couple post-purchasing a home benefit more than an unmarried couple in 2022?

It's kinda 6 of one, half dozen of the other. When an unmarried couple purchased a home together, it depends on the income of each partner individually, as to which is the best way to file.

For starters, who has the higher amount of SCH A deductions? With no kids, I would expect it to not make any difference really. If this home is the primary residence for both of you, you can try several things since your only deductible expenses for this purchase are property taxes and mortgage interest.

First split the mortgage interest and property taxes 50/50 between the two of you. They will be included as an itemized deduction on SCH A. Most likely, the total of all itemized deductions will not exceed your standard deduction of $12,950 for each of you.

Next, have the highest income earner claim all the property taxes and mortgage interest paid and see if the total of all itemized deductions exceeds their standard deduction of $12,950.

Third, have the lower income earnder claim all the property taxes and mortgage interest paid and see if the total of all itemized deductions exceeds their standard deduction of $12,950.

Most likely, regardless of how you report this, it's possible the standard deduction will not be exceeded by the itemized deductions. If so, then I recommend you just split it 50/50. Makes the most sense if you're planning to getting married at any time while you two own this house.

My partner makes more than I do. We both work full time and have no children. Paying bills/mortgage 50/50.

Hal_Al

Level 15

Unmarried couples claiming mortgage interest (and real estate tax).

You pretty much have a choice. One can claim it all or you can split it. It's usually best if only one claims it, allowing the other to use the standard deduction.

You have to meet the rules, which are:

You are legally obligated to pay it
You actually pay it. Paying from a joint account where you made sufficient deposits to cover the payments will usually meet this standard. However. paying from your own account would be a stronger audit defense.

mengero

Level 2

I have a similar situation. If the mortgage for an unmarried couple is paid out of a joint bank account, doesn't the split have to be in proportion to their payments into that account? I would like to be able to assign all mortgage interest to the higher earner as an itemized deduction and use the standard deduction for the lower earner, but I don't think that is legit. IRS publication 936 states that you must show how much interest each person paid. If coming from a joint account, I assume that would be tied back to how much each person contributed to that joint account. Please clarify.