Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
If 2 unrelated individuals jointly own a residence which has indebtedness of $2,000,000 can each one deduct mortgage interest on $1,000,000 on their separate tax returns or is the deduction limited to mortgage interest of $500,000 for each one??

Thank you

BM
Print the post Back To Top
No. of Recommendations: 0
If 2 unrelated individuals jointly own a residence which has indebtedness of $2,000,000 can each one deduct mortgage interest on $1,000,000 on their separate tax returns or is the deduction limited to mortgage interest of $500,000 for each one?

$1 million each.

TMF ExRO
Phil Marti
Print the post Back To Top
No. of Recommendations: 0
TMF ExRO

Thank you for your response.

Can you tell me what data (code section, ruling, case, authoritative article, etc.) your answer that
each unrelated party can deduct interest on $1,000,000 of mortgage debt is based on.

BM
Print the post Back To Top
No. of Recommendations: 0
Can you tell me what data (code section, ruling, case, authoritative article, etc.) your answer that
each unrelated party can deduct interest on $1,000,000 of mortgage debt is based on.


I don't know what the Code section is for the home mortgage interest deduction. You can research title 26 of the US Code at http://uscode.house.gov/usc.htm.

IRS Publication 936, which does not carry the force of law, discusses the deduction. In it you will find that the limit is $1 million except for one who files married, filing separately, for whom it is $500,000. Since two unrelated people living together won't be filing MFS, I assume, their limits are $1 million each.

TMF ExRO
Phil Marti
Print the post Back To Top
No. of Recommendations: 0
TMFExRO:

"Can you tell me what data (code section, ruling, case, authoritative article, etc.) your answer that
each unrelated party can deduct interest on $1,000,000 of mortgage debt is based on."


I don't know what the Code section is for the home mortgage interest deduction. You can research title 26 of the US Code at http://uscode.house.gov/usc.htm.

IRS Publication 936, which does not carry the force of law, discusses the deduction. In it you will find that the limit is $1 million except for one who files married, filing separately, for whom it is $500,000. Since two unrelated people living together won't be filing MFS, I assume, their limits are $1 million each.


Phil, correct me if am wrong, but are there not other requirements related to deductability by unmarried co-owners. IIRC, a person needs to be liable for the debt and actually to make the payments in order to deduct related interest (or some such).

I realize that this was beyond the scope of the original question, but it would be a disappointment to the original poster to get the answer they were hoping for for when asking their question but later lose the deduction for other reasons.

Just my $0.02. Regards, JAFO


Print the post Back To Top
No. of Recommendations: 1
Since JAFO31 has flogged Dobbin in #40861, I'll add this hypothetical question. Suppose 5 unrelated people in Manhattan, all living in rent-controlled apartments, together buy a 3 bedroom cottage in the Hamptons for $5 million. (Fools, though I am making this up, it is not so silly as you may think.) So each, if they pay equally on the loan, is OK for $1 million on indebtedness? TMFExRO answered for 2 people, with the assumptions that JAFO31 implies; is it so for more?

Ghostly voice of Dobbin: "JABoa, when you meet your Maker, I will be right by his side and I'm going to bite you. Hard."
Print the post Back To Top
No. of Recommendations: 0
Since JAFO31 has flogged Dobbin in #40861, I'll add this hypothetical question. Suppose 5 unrelated people in Manhattan, all living in rent-controlled apartments, together buy a 3 bedroom cottage in the Hamptons for $5 million. (Fools, though I am making this up, it is not so silly as you may think.) So each, if they pay equally on the loan, is OK for $1 million on indebtedness? TMFExRO answered for 2 people, with the assumptions that JAFO31 implies; is it so for more?

Funny you should ask. When I read JAFO's post, I thought, "Hmmm. Must be JABoa traveling incognito." <g>

As long as none of the five is married, total mortgage indebtedness for each is limited to $1 million. Now, do you think they'd invite me out for a weekend?

TMF ExRO
Phil Marti
Print the post Back To Top
No. of Recommendations: 0
And, how about the $100,000 each one could borrow, secured by the house, of course, for the **furnishings**?

--
LoTax
Print the post Back To Top
Advertisement