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Financial Planning / Tax Strategies


Subject:  Re: Mortgages and equal ownership Date:  6/8/2009  9:38 AM
Author:  aj485 Number:  106238 of 129771

I am considering just getting the mortgage in my name to keep us under the income limit. We both would still own equal parts and make all payments and down payments together. If we did something like that would we both still be able to claim mortgage interest paid and the first time home buyers tax credit equally? I'm just curious to know if the mortgage is in one name what the tax ramifications if any would be, she would still be on the title of the home if that is possible.

One more thing - your tax ramifications on a go-forward basis may actually cost you money to buy this way.

As already mentioned, your GF will not be able to deduct her share of the mortgage interest, since she is not on the mortgage. You, on the other hand, will get a 20% tax credit for your half of the interest paid (assuming that you are splitting the mortgage costs 50/50). Does your 20% credit more than make up for GF's loss of her interest deduction? (If GF's income is close to yours, probably not.) If so, how will you provide her with that benefit, since you seem to be wanting to split everything 50/50? Will you run into gift tax issues if you choose to gift her the money?

Also, will GF be able to take full advantage of deducting property taxes if she does not have the mortgage interest deduction? I know that Illinois has state income tax, which is also deductible, so she may be able to, but if not, that's an additional deduction on her side that your 20% credit would need to make up for.

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