Can a 1099 Mortgage Interest be Filed by one Payer even it's both in our names?

[marcph2007]

My partner and I split in July 2025 and sold our primary residence in Arizona. The house was sold at a loss, and he withdrew some money from his retirement account to cover the closing costs. He now wants to claim the full amount of the 1099 mortgage interest, which I agreed to, but I am concerned about the risk of an IRS audit if I don't report half of it on my 2025 tax return. What is the best way to handle this situation to avoid any issues?

Thank you,

marchph2007

[DoninGA]

Since mortgage interest is an itemized deduction on Schedule A, you are not required to report the interest on your tax return.

[marcph2007]

My follow-up question is what about the 1099-S. Since it's a loss, do I still need to enter this half in my tax return or there's no point entering this at all. Thanks!

[DoninGA]

@marcph2007 Since a Form 1099-S was received you are required to enter the sale of the residence on your tax return, your share.  If the gain on the sale is less than the exclusion amount there will not be any taxes owed.

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

Selling cost can include escrow fees, legal fees, real estate agent commissions, advertising costs, and even home staging fees.

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported. You will need the online TurboTax Premium edition to report the sale if you are using the online editions. Make sure that you indicate that you want the sale of the home reported on your tax return.

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Less Common Income
On Sale of Home (gain or loss), click the start or update button