Mortgage interest split

[JamesChen]

I am single and I bought a house with my boyfriend. We are both paying for the mortgage and have our names on the loan. My question is how to split the interest. There are two ways to calculate and I am not sure which one is the right way. Let's say the loan is $1.3M and we paid $50K as interest. 

Approach 1: $750K/$1.3M*$50K = $28,846. Then each of us can claim half of this, so $14K for each. 

Approach 2: split the 1098 into two, each of us would have $650K as the mortgage amount and have paid $25K on the interest. With an individual cap of $750K, we would be able to claim $25K each on the interest.

Would really appreciate if anyone can help!!

[AmeliesUncle]

*IF* you are both paying EQUAL amounts of the mortgage, #2 is the correct method.

If one of you is paying more than the other, you can't split it 50/50.  You can only deduct the amount that you pay.

[Carl]

Based on a recent ruling by the 9th Circuit Court of Appeals, each of you gets the full $750K separately. For details on the ruling, see the article at https://www.journalofaccountancy.com/news/2015/aug/mortgage-interest-deduction-201512809.html

So each of you can use your "Approach #2" scenario. Apparently, it's already been challenged in tax court, and the IRS lost.

[JamesChen]

Thank you so much! I wish my tax expert knows this...i am using turbo tax live this year, but she said that I should follow approach 1. I am glad that I asked this question again here! 

[AmeliesUncle]

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@JamesChen wrote:

I wish my tax expert knows this...i am using turbo tax live this year, but she said that I should follow approach 1. 

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That's why you should go to a REAL tax professional, not this TurboTax stuff.  🙂