How much Outstanding Mortgage Principal do I enter when I co-own the mortgage?

[itsryglo]

My partner and I (both single) share a mortgage 50%/50% in California. We split the mortgage payments 50%/50%. For the "Outstanding mortgage principal" field in TurboTax, it says to enter only the portion I am liable for. Am I liable for the total amount or only  50% (with my partner being liable for the other 50%)?

[cwglindn]

Please get one of the TAX PROs to answer this one. 

Most of the information I know is about claiming the interest.  As far as the Outstanding Mortgage Principal, I would put in the whole amount because that is the number the IRS is looking for (and if you both signed for the mortgage, you are both equally libel for the whole amount).

...But what I understand is The IRS will see whomever is on the 1098 as the one who can CLAIM interest and puts in the numbers (including Outstanding Mortgage Principal).  I've seen partners figure out who benefits the most and then work out a plan.

I found an article where they noted you can put half the interest with a note pointing to a letter from the other person explaining the situation. Link to Pocket Sense

In any case, I would wait for a pro to answer or get the paid tax advice with audit support.

[itsryglo]

Thank you, cwglindn. My assumption is same as yours, that I am liable for 100% of the principal. My thinking is that if my partner were to stop paying their half or die, I would effectively become responsible for 100%. The bank doesn't care. I'll wait and see what the Pros say though.

Meanwhile, I also have a mortgage interest question, which perhaps you can help answer:

Our total principal is $1,068,518.07. My understanding is we can only deduct interest for mortgage up to $750,000. We paid a total of $22,429.55 in interest, of which I contributed 50% or $11,214.77. So, in TurboTax's "Interest paid" field, should I enter the $11,214.77 that I actually paid? Or do I first need to manually reduce the amount of interest I enter down to $7,871.65 (i.e., 70.19% of what I actually paid) in order to account for our total principal being higher than the $750,000 maximum?

[cwglindn]

First, I would hope that TurboTax does the computations for you once you put in the information.

Next, if you closed on your loan before 12/16/2017, or had a contract to close by 1/1/2018, then closed by 4/1/2018, then you can deduct the $1 million limit. This is why the 1098 includes origination date.

If after 12/16/2017, then yes the 750k limit applies, AND if Turbo Tax doesn't do the calculations for you, then you can go to https://www.irs.gov/publications/p936 and go to the Table 1 and Table 2 to get the calculation correct.

[ how I interpret it (Check my numbers), if closed AFTER 12/16/2017: 375,000(half) / $1,068,518= .351 then .351 * 22,430=7,872.93 or  7873]

[itsryglo]

Thank you. Origination date is after 12/16/2017. It is unclear if TurboTax handles the calculation for me, and I don't  know where to look to verify.

[itsryglo]

Good news: on my third pass going through the mortgage interest fields, TurboTax showed me a new set of screens saying it would adjust down my interest claim for both Federal and California returns. Not sure what I did wrong during the first two passes through to not trigger these screens, but at least now I have confidence that it's calculated correctly.