@pk
Thank you for your reply. Here are the response to your questions:
1. 2024 taxes filled as MFJ, same for 2023.
2. India, and yes, my NRA spouse is citizen of India.
Doing little bit of research, I also see an option for MFS for both of us. That way, we split the rental income and expense in half. Based on some calculators, I may not pay any tax after the deduction and my spouse will pay about 10% as income tax, Spouse files 1040NR claiming ECI.
Prepaying the mortgage was an intent to get some cashflow but we were worried about the tax liability, given the interest portion will be taken away from the deductions. But in the end, it doesn't seem to making a huge dent on what we end up paying as taxes.
