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Should me or my dad claim the mortgage interest on the home we purchased together in 2019? My dad is retired and I work. I have 1 income, no kids, and divorced

 
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6 Replies

Should me or my dad claim the mortgage interest on the home we purchased together in 2019? My dad is retired and I work. I have 1 income, no kids, and divorced

It might not even make any difference to either one of you, unless one of you has enough itemized deductions to exceed your standard deduction.  If you are both on the mortgage and/or deed, you can each enter the amounts you paid in 2019 for mortgage interest, property tax, private mortgage insurance and loan origination fees ("points").  

 

It is very hard for a lot of people to use itemized deductions now that the standard deduction is so much higher.  Your home ownership may not have any effect on your tax due or refund, especially if you purchased the house late in the year.  

 

 

 

Standard Deduction
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach.  The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes. 

 

2019 Standard Deduction Amounts

 

Single $12,200   (+ $1650 65 or older)

Married Filing Separate  $12,200   (+ $1300 if 65 or older)

Married Filing Jointly $24,400   (+ $1300 for each spouse 65 or older)

Head of Household $18,350  (+ $1650 for 65 or older)

(Also + $1650 if legally blind)

 

 

Home Ownership

There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.

 

Buying a home is not a guarantee of a big refund.  Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home ownership deductions.

 

Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees.  There are no deductions for appraisal, inspections, title searches, settlement fees. etc.

 

Your down payment is not deductible.

 

Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.

 

Home improvements, repairs, maintenance, etc. for your own home are not deductible. 

 

Homeowners Association  (HOA) fees for your own home are not deductible.

 

Go to Federal> Deductions and Credits> Your Home to enter mortgage interest, property taxes, private mortgage insurance (PMI) and loan origination fees (“points”) that you paid in 2019.  You should have a 1098 from your mortgage lender that shows this information.  Lenders send these in January/early February.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
pk
Level 15
Level 15

Should me or my dad claim the mortgage interest on the home we purchased together in 2019? My dad is retired and I work. I have 1 income, no kids, and divorced

@donnatorrey , first one needs to satisfy another condition before deciding whether one or the other of you can claim the mortgage interest-----(1)  you must be liable for the debt secured by the property for one to claim the mortgage interest. Thus you  must be on the mortgage note  AND  (2) you must have paid the mortgage interest.

For property tax deduction again you must own the property ( i.e. be on the deed ) and must have paid the taxes.

Beyond  that I absolutely agree with the information  provided by @xmasbaby0 

rjs
Level 15
Level 15

Should me or my dad claim the mortgage interest on the home we purchased together in 2019? My dad is retired and I work. I have 1 income, no kids, and divorced

I want to emphasize more strongly something that both xmasbaby0 and pk mentioned, because I think it's a key consideration in answering your question.


In order to claim the mortgage interest deduction, you have to meet two basic requirements. First, you have to be legally liable for the payments, which means you have to be listed as a borrower on the mortgage. If only one of you is listed on the mortgage, only that person can claim the deduction.


Second, you have to have actually paid the interest. That means that you have to decide who is going to claim the deduction before you make the payments. Only the person who actually paid the interest can deduct it. Even if you are both liable for the payments, if your father made the mortgage payments, he can't decide later to let you claim the interest deduction.

Should me or my dad claim the mortgage interest on the home we purchased together in 2019? My dad is retired and I work. I have 1 income, no kids, and divorced

There is potentially some important information missing here.  You did not ask if he and his dad live together. If they don't, you didn't ask who lives in the house he is asking about and if the other person owns a separate house and takes a deduction for that other house.    I am in the same situation as the person who posed the question but your answer doesn't go far enough for me to understand what to do.    

 

I refinanced my house this year to take some cash out and help my son purchase his house.  I am the sole owner on the title to the house I live in and I am also on the title, WITH my son, of the house he lives in.  The bulk of the investment in the house so far is mine because I provided the down payment, closing costs, and two months of mortgage.  However, I also claim my own house for which I have a mortgage as well. Both my son and I work.  He will not have enough to itemize deductions. I am self-employed and I do usually itemize deductions.   Can I claim the house on my taxes and how would I do that?   

Cynthiad66
Expert Alumni

Should me or my dad claim the mortgage interest on the home we purchased together in 2019? My dad is retired and I work. I have 1 income, no kids, and divorced

You can claim mortgage interest on a first and second home on property you own.  A general rule of thumb is the person paying the expense gets to take the deduction. However, you must also have a legal liability to be able to claim the mortgage interest.

 

Based on your statement, it seems your name is on the deed and not the mortgage of the 

property owned with your son.  If so, you are not legally liable for the mortgage and you cannot deduct the interest even if you paid the expense..

 

Since you are not liable for the interest, it is not an allowable deduction. However, it would be an itemized deduction on your return If it was an allowable deduction, claimed on Schedule A.

 

You did not ask about property taxes but, for property taxes, the taxpayer must be on the deed. If that qualification is met, the deductions can be split between the qualified taxpayers in any manner (50/50, 0/100, etc), as long as the total claimed between all returns does not exceed 100%. @mjmoorman

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pk
Level 15
Level 15

Should me or my dad claim the mortgage interest on the home we purchased together in 2019? My dad is retired and I work. I have 1 income, no kids, and divorced

@mjmoorman  from your post it appears that because you are on the title, you can indeed  can claim the property tax deduction ( either all or partly).  However, the mortgage interest deduction requires  you to be liable for the loan and you are already claiming the  interest you are paying on the refi amount.  So I don't believe you can do that ( unless you are on the loan doc of the new place ).

 

But what worries me  (perhaps needlessly ) is a statement that you made that  about  using itemized deduction  because you are self-employed.  Are you saying that  you are having a lot of deductions  because of the business / self-employment?  Self-employment  is reported on Schedule C  where you recognize  your gross income, all allowable expenses associated with  this  income stream and are taxed on the net income.  Also you pay Self-Employment Tax at 15.3% on the net   ( computed on Schedule-SE -- equivalent to FICA taxes  for the  employed earners).  I hope that I am wrong  in my worry.

 

Please let me know i you need more on this.

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