My wife and I purchased our primary home a few years ago, which has a current outstanding mortgage principal of about 1.4M. So far in our married joint tax filings we were limited to deduct mortgage interest paid on only up to 750K. We are going to get divorced this year but we will still own the house and continue paying its property tax and mortgage bills together. Since from this year we expect to file our returns as single filers, our question is can the 750K mortgage principal for interest deduction apply to each of our returns separately, so we could potentially individually deduct almost twice the amount of mortgage interest than the combined 750K limit allowed us to in past years?
In a similar vein, can the SALT deduction limit of 10K also apply to each of us individually, so we can potentially deduct twice the amount of property taxes that we pay for this house -10K on her return and 10K on mine?
Same question also about the home energy efficiency credits. We will install a heat pump for which we can get a credit of 30% up to $2000. Can we show shared cost of that enhancement and each claim 30% up to $2000 each?
With regard specifically to the mortgage interest limitation, the federal appellate court ruled in Voss vs Commissioner that unmarried co-owners are each entitled to the full limitation. In other words, the mortgage interest limitation applies per taxpayer, not per residence. The IRS subsequently agreed to abide by this decision.
https://law.justia.com/cases/federal/appellate-courts/ca9/12-73257/12-73257-2015-08-07.html
Similarly, the SALT limitation applies per tax return. Thus unmarried co-owners each benefit from the full $10K limit.
Remember that each taxpayer may only deduct the amount of mortgage interest or property tax that they actually paid.
Your question about the home energy credit is answered under "Joint occupancy" on page 3 of the instructions for Form 5695:
https://www.irs.gov/pub/irs-pdf/i5695.pdf#page=3
You have to remember that you are each filing as single. So if you each own half of the home you can each only deduct half of the usual deductions for that ownership. Also, the energy credit can only be used by the one who has the home as a primary residence. Generally the mortgage interest is deducted by the one who pays it. .
With regard specifically to the mortgage interest limitation, the federal appellate court ruled in Voss vs Commissioner that unmarried co-owners are each entitled to the full limitation. In other words, the mortgage interest limitation applies per taxpayer, not per residence. The IRS subsequently agreed to abide by this decision.
https://law.justia.com/cases/federal/appellate-courts/ca9/12-73257/12-73257-2015-08-07.html
Similarly, the SALT limitation applies per tax return. Thus unmarried co-owners each benefit from the full $10K limit.
Remember that each taxpayer may only deduct the amount of mortgage interest or property tax that they actually paid.
Your question about the home energy credit is answered under "Joint occupancy" on page 3 of the instructions for Form 5695:
https://www.irs.gov/pub/irs-pdf/i5695.pdf#page=3