My wife and I file MFS in CA (a community property state) primarily for student loans reasons, which outweigh the downsides of filing this way. We now have a second home and I am trying to figure out how to maximize the mortgage interest rate deduction if we both itemize. Based on IRS Publication 936 "Separate returns. If you're married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. However, if you both consent in writing, then one spouse can take both the main home and a second home into account."
Do I interpret this to mean that I can claim the full interest on 1 home (up to the 375K indebtedness rule) and she can claim the full interest on the other home (even though we each pay for both)? My hold up is that typically when we file our returns they look nearly identical since in a community property state and in our situation our income, withholding, and deductions are all evenly split. In this case we would have a difference in the mortgage interest rate deduction. A brief follow up would be, would we do the same with property tax for each property (that is each claim it for each respective house up to the 5K max)?
Thank you!
