My fiance and I bought a house, he claimed head of household last year because he makes more money, I was told only 1 of us can claim purchasing our home,who should it be

[huston1982]

Both of our names are on our loan and we both got seperate tax forms to claim so I am confused

[DoninGA]

The purchase of a personal residence is not reported on a tax return so no one "claims" the home on a return.

You can claim as an itemized deduction on Schedule A the Mortgage Interest, Mortgage Insurance, Points paid on the loan (if any) and property taxes paid that each of you actually paid on your individual tax returns.

[Mike9241]

2 of the requirements to claim head of household

1) a legally related dependent  - you are not (in your situation that would likely mean you had a child and he's the father)

2) the legally related dependent used the taxpayer's household, for which taxpayer paid at least 1/2 the cost, as their principal place of abode for more than 6 months.  

as to who can take the deduction for mortgage interest and taxes, who paid them?  there is no such rule that says the one that earned the most gets the deduction 

[Hal_Al · Accepted solution]

Unmarried couples claiming mortgage interest and real estate tax.

You pretty much have a choice. One can claim it all or you can split it. It's usually best if only one claims it, allowing the other to use the standard deduction.

But, you still have to meet the rules, which are:

1. You are legally obligated to pay it
2. You actually pay it. Paying from a joint account where you made sufficient deposits to cover the payments will usually meet this standard. However, paying from your own account would be a stronger audit defense. 

 There is no such rule that says the one that earned the most gets to use Head of Household filing status.  There are specific rules, the biggest being that you must  have a qualifying person, usually a related dependent.  Your fiancé most likely must file as Single. 

[Opus 17]

Head of household:

To file as head of household, the taxpayer must pay more than half the cost of maintaining their home, and they must provide care for a qualifying dependent (usually their child) in that home.  Earning the most money doesn't necessarily mean that person pays more than half of the cost of maintaining the home.  The person who earns more might might be supporting other children, or their parents, or saving their money.   But it probably is true most of the time that the person earning more money pays more of the cost of maintaining the common household.

Mortgage and property taxes:

To deduct the mortgage and property taxes, you must be an owner of the home, you must be legally obligated to pay the expense (listed as an owner and/or listed as a borrower) and you must actually pay what you want to deduct.  If you pay 30% of the taxes and interest, you would normally deduct that amount of the expenses on your tax return.

The IRS will usually not dispute whatever arrangement you decide.  For example, maybe you decide that your partner pays 100% of the mortgage and property taxes, but you pay 100% of the utilities, insurance, and food for the home.  

The person who claims the mortgage interest and property taxes is not required to also be the person who claims head of household.  They aren't connected, except that the person who claims HOH status must pay more than half the total household expenses.  If partner 1 claims all the mortgage interest and property taxes, but partner 2 wants to file as HOH, partner 2 will need to document that the other expenses they pay (food, insurance, repairs, utilities) are more than partner 1 paid.

Disputes:

If you can't decide which partner should claim the child as a dependent, the IRS tiebreaker is whichever partner has the higher income.  If you can't decide how to split the mortgage interest and property taxes, each person can only claim what they can prove they paid.  If the expense was paid from partner 1's account, and not a joint account, partner 2 may have a hard time proving they paid a portion of the expenses.

Ultimately, if you can't agree how to file your tax returns, you have a significant relationship problem that's more important than your tax returns. 

[huston1982]

I did not say it was a matter of "not agreeing" so you can keep that out of it, that is super judgmental, my question was because we are not married which does make it a little tricky for certain things, obviously this is our first home we have purchased so I thought I would ask the community in Hope's someone had or has a similar situation, NOT someone to jump on here and immediately jump to rediculous assumptions that we cannot come to an agreement, good grief smh

[huston1982]

I understand the whole house does not get claimed, what I am asking is since we are not filing together can we both claim that we both purchased the home, since it IS one of the questions on our returns, can we both claim paying the property taxes and mortgage Insurance and points? Or just 1 of us, thank you for trying to help 🙂

[huston1982]

Thank you so much for this response, that makes perfect sense and I appreciate you 🙂

[Opus 17]

@huston1982 

I didn’t mean any disrespect. I couldn’t tell if you were having confusion, or an argument with your partner. If you were, you would not have been the first.

Because of the high standard deduction, it may be the case that if you split the expenses, neither of you will have enough itemized deductions to overcome the standard deduction, but if one person claims all the housing expenses, they might pass the threshold to deduct them. That will depend on your other itemized deductions and your overall tax situation, and the only way to know for sure is to test different scenarios.  You can divide the costs in any manner that you both agreed to, as previously explained.

Likewise, if one of you has a significantly lower income than the other, the person with the lower income might get earned income credit from claiming the dependent, that would be greater than the extra tax paid by the higher income partner because they can’t file as head of household without the dependent. This would also have to be tested.

Unmarried couples who live together and share a child have a great deal of flexibility in how they file their tax returns, and it may take several test scenarios to find the combination that gives the lowest overall taxes.