Who claims the house on tax form if there’s two owners under the house?

[RayW7]

There are different situations that affect how you deduct mortgage interest when co-owning a home.

• The co-owner is a spouse who is on the same return: Enter the full amount as it appears on the 1098.
• The 1098 has multiple names, but only one person is paying the mortgage/interest: Only the person who actually paid the interest can take the deduction.
• The 1098 has multiple names and multiple people are paying the mortgage/interest: Each can deduct their portion of interest paid. When entering the 1098 only enter the amount that you actually paid, not the full amount.
• The 1098 is in someone else's name (not a seller-financed loan), but you pay some or all of the mortgage/interest: In most cases you'd have to be the owner of the property to take the deduction. If you can prove you're the owner in every way but in name (constructive ownership), you could still be allowed to take the deduction.  (You could get audited and have to prove constructive ownership. If the IRS doesn't allow the deduction, you may have to go to tax court and argue your case.)You’ll be able to explain in TurboTax why you’re taking the deduction. In the Deductions & Credits section (where you enter mortgage interest), check The interest amount I entered is different than what's on my 1098 when entering your info.

[jim60360]

In my case I have my son in law on the mortgage and title for a rental house along with me.   I was entered on the loan to help him qualify.  I will not be filing a schedule E for this house and would like for him to file the Schedule E to claim the rental income and for all deductions.  The 1098 has my name on it.  What should we do?

[DianeW777]

Your son-in-law is able to use the deductions since his name is on the property. It's all right for him to claim the income and the expenses if he is the one handling all of the rental activity and is also liable as one of the owners of the property. 

You should change the reporting social security number at the financial institution or bank.  If they are not willing to do that you can also nominee the form over to him (or simply keep in his file with his tax records for future use).

Nominee returns. 

Generally, if you receive a Form 1098/1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1098/1099 with the IRS (the same type of Form 1098/1099 you received).  You must also furnish a Form 1098/1099 to each of the other owners. 

File the new Form 1098/1099 with Form 1096 (this is a transmittal for the 1098/1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1098/1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1098/1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

• Form 1096-Transmittal 
• Form 1098 2020

[MeltedIceCream]

Hi Diane,

This is extremely helpful. As a follow-up I am in a similar situation. I'll lay the facts below.

1. I am the sole person on the loan, but other co-owner is on title.

2. We plan to file half of the 1098 int/taxes on each of our own Schedule E's.

Question (s)

1. Will both of us need to file the 1096 to elect the nominee status or just him?

2. Am I allowed to e-file like this with Turbotax, or will I need to paper file?

Thanks in Advance! I haven't been able to find much information on this.

[RobertB4444]

@MeltedIceCream  You are the only person on the loan so you are the only one who needs to file the 1098/1096 in order to pass the 50% of the mortgage interest deduction on to your partner.  You are the 'nominee' in that you received a mortgage interest deduction in your name that is actually intended for someone else.

You can absolutely still file electronically with TurboTax.  Just follow @RayW7's excellent instructions above.