Mortgage interest deduction - two different parties on loan

[f2099rs]

My son and my name appear on a 1098 from the bank, but his Taxpayer ID is what is in the box.  We both contribute materially to taxes and interest.   Last year he took the mortgage interest deduction to take the points since its his primary residence.  This year it is in my advantage to take the 1098 interest deduction.  My questions are 1) From what I read this seems to be ok, what are your thoughts  2)  How do I do this in Turbo tax.  That is do I skip the efile and do a manual file with a hard copy of the 1098 attached to my return?  3) Any other thoughts?

[MichaelL1]

I know your situation is a parent/son relationship.  We have many people buying homes together and trying to figure out the same exact this you are.  

Below in BOLD are my answers given to others, that really addresses your situation.  

1) Yes, you can do this, 

2) you can do this in TurboTax and e-file (the 1098 does not get attached and does not need to be) and 

3) just make sure the son is not claiming some of the same dollars you are claiming for the same year.  

Keep documents in the tax file as to how you arrived at what was on the return, should it be questioned later.

--------------------------------------------------From earlier response I gave that applies to this question. ----------------

Jointly owned home:

  Yes, as long as you are listed on the loan you can deduct the mortgage interest and property taxes.  You do not have to be on the 1098. 

You can split the amounts paid for things like mortgage interest, property taxes, loan origination fees (points) etc. and each itemize with your split percentage (some people do 50-50, some do 100-0, some do 40-60 - just depends on what you agree on) as long as between the two of you, you do not exceed 100%.

Note: the first year of purchase you will not have a full year of property taxes and mortgage interest so many times the 2nd year of ownership gives you the greatest benefit.

To enter mortgage interest

    Click on Federal Taxes (Personal using Home and Business)

    Click on Deductions and Credits

    Click on I'll choose what I work on (if shown)

    Under Your Home

    On Mortgage Interest, click on the start or update button

  Property taxes is right after this area.

  "For jointly owned property, you are entitled to deduct the actual amount of interest or taxes that you paid. If you and your partner contribute equally to the expenses, you can each take 50 percent of the deduction. Often, however, dividing the deductions will result in the highest total tax, because neither partner will have enough to itemize. In many cases it is most advantageous for the person with the highest income to take all the deductions, which will provide the biggest decrease in taxable income. You might find it helpful to prepare your tax returns three times: taking the standard deduction; itemizing using your percentage of the deductions; and itemizing using the full deductions on the tax for the partner with the highest income. Compare the results with those of your partner's -- for example, if you take the standard deduction and include none of the deductions for property, and he itemizes the full amounts allowable on the property -- and determine which scenario results in the lowest net tax in total on the two returns."

 Source: http://budgeting.thenest.com/tax-deductions-related-jointly-owned-property-unmarried-individuals-238

[GAR4]

Is your reply to the question below still valid? My partner and I co-habitat and co-own a home.  We are both listed on the mortgage loan, property title, and the 1098 (I am listed first with SSN).  A number of years ago we saw online advice that mortgage interest and property tax deductions could be split "as most advantageous" to the two co-owners, as long as the total of the  splits shown on both returns did not exceed 100% of the actual total interest or prop tax. This seems to be what you are saying in the first paragraph of your reply below. 

However, the last paragraph of your reply says each party can deduct "..the actual amount of taxes and interest you paid." This is not the same thing, yet you end with suggesting trial tax return  runs to see which is most advantageous to both parties.

Current IRS response to this question is summarized in: https://www.irs.gov/faqs/itemized-deductions-standard-deduction/other-deduction-questions/other-dedu... The IRS response seem to say each party can only take what they "actually paid." There is additional language in other IRS documents which seems to contradictory... " determine the split on all relevant factors" vs "deduct only what each party actually paid."

We would appreciate your current thoughts on this subject.  Thanks.