topic How do the new tax laws affect mortgage interest deductions for unmarried couples with mortgages over the $750,000 limit for deductions? in Deductions & credits

How do the new tax laws affect mortgage interest deductions for unmarried couples with mortgages over the $750,000 limit for deductions?

jeapromo — Tue, 04 Jun 2019 19:46:25 GMT

If my unmarried partner and I buy a home in 2018 with a $1.1M mortgage and split the interest payments can we each claim the full mortagage interest deduction? I understand that under previous tax law there was a limit on interest deductions (you could not deduct interest on loan amounts over $1M), but that limit applied on a per-taxpayer basis, so an unmarried couple with a loan greater than $1M could split the interest payments and each deduct the full amount of their interest payments. Now that the limit on mortgage interest deduction is lowered to $750,00, does that rule still apply? In other words, if my partner and I each pay the interest on our share of the loan ($550,000), can we each fully deduct our mortgage interest payments under the new tax law, even if between the two of us we are paying interest on a loan over $750,000?

If I recall correctly, the ability of two unmarried taxpa...

Opus 17 — Tue, 04 Jun 2019 19:46:27 GMT

If I recall correctly, the ability of two unmarried taxpayers who own a home together, to deduct interest on a $2 million mortgage ($1 million each) is the result of a couple of tax court cases that ruled that the $1 million limit was per taxpayer, not per loan instrument.

I just reviewed the language of the TCJA and the section that lowers the limit for acquisition debt incurred after 12/15/17 does not also modify the language to specify loan amount rather than personal indebtedness amount. Since the law is silent on this particular "loophole", then I assume it is not changed, and two unmarried taxpayers can deduct interest on up to $1.5M mortgage (750K each). But I am not an attorney.

I was also doing research and found the ruling that Opus...

cbsteck — Tue, 04 Jun 2019 19:46:28 GMT

I was also doing research and found the ruling that Opus 17 refers to ... Voss vs Commissioner of Internal Revenue. It was in 2015 when limit was higher. But language on ownership still same in TCJA (just limit reduced). I am also not an attorney.

Unmarried taxpayers who co-own a residence can each deduct interest payments on home-acquisition and home-equity debt up to the $1.1 million limit in Sec. 163(h)(3), the Ninth Circuit Court of Appeals held on Friday, reversing a Tax Court decision (Voss, No. 12-73257 (9th Cir. 8/7/2015), rev’g Sophy, 138 T.C. 204 (2012)).

Ninth Circuit acknowledged that the statute is silent about how the debt limit applies when there are unmarried co-owners of property, but it rejected the Tax Court’s analysis nonetheless. It noted that if Congress wanted the debt limits to apply on a per-residence basis

Look up Voss vs Commissioner of Internal Revenue (2015 ruling) for more information. TCJA makes no changes, from what I read. I am also not an attorney.