2006-11-30 06:33:14 · 6 answers · asked by crimsongraycoug 1 in Business & Finance ➔ Taxes ➔ United States
I own the home with my domestic partner in the state of california. His name and mine are on the deed and, but the loan is in his name only. I pay 1/3 of the mortgage payment. He pays the other 2/3.
Since I am on the deed and we "own" the home together, doesn't the IRS look at this as a "Written" partnership, thus, I would qualify to deduct my part of the mortgage interest?
Secondly, we I am able to write my part off on my taxes, I assume he would only deduct his 2/3 of the payment only and not the full portion.
By the way, thanks for the feedback, I appreciate the quick responses.
2006-11-30 06:52:45 · update #1
The partnership idea is creative, but it won't work. Title is in both names.
In order to deduct interest it has to be paid on a debt that is enforceable against you. Your name is not on the mortgage therefore no deduction.
If you deduct all of the real estate taxes how close are you to one third of the mortgage interest?
The only problem with taking all of the real estate taxes is that it might throw you into alternative minimum tax.
I'm sure the mortgage company would more than welcome you to be a co-signor on the mortgage if you ask them.
2006-11-30 07:27:55 · answer #1 · answered by waggy_33 6 · 0⤊ 0⤋
The rule of law is this:
Mortgage interest on a qualified personal residence is deductible by the person who pays the interest expense. Thus if you make 1/3 of the mortgage payments, and you live in the residence, then you get 1/3 of the interest expense and your partner gets the other 2/3s. The rights of the deduction cannot be assigned beyond this approach.
This is different than the real estate taxes asessed on the property. Real estate taxes, by statute, are the obligation of the individual(s) listed only the title of the property, and are deductible only by those listed on the title. The right of the deduction cannot be transferred.
You used the phrase "domestic partner". I assume you have registered this with the State of California. If you have, bear in mind that while your filing status for the IRS is 'single' or 'head of household', that a new law went into effect for 2006 for registered domestic partners in California. Your filing status for your California return must be 'married-filing joint' or 'married-filing seperate'. This is not optional, even though it results in a different California filing status than the IRS return.
2006-11-30 21:07:16 · answer #2 · answered by tax_black_belt 2 · 0⤊ 0⤋
It's always nice to help family :) and I see this often with partners.
In order to deduct the interest and taxes legally with the IRS, the home must meet the requirements of a principal residence and you must:
1) pay the debt
2) be legally responsible for the debt
This means your partner would not be able to deduct the 1/3 you are paying as he is not paying it himself. You can in fact be called to produce cancelled checks proving payment...not just a receipt.
As you are not on the mortgage, you are not legally responsible for that debt and do not meet the 2nd requirement for the IRS. (If you are legally registered domestic partners in CA, then you do meet that requirement in CA, but I presume you are looking to protect both IRS & CA deductions).
Don't fret. You can write a legal, binding agreement between you and your partner that states your ownership agreement and responsibilities. I suggest it be done immediately. It should also be notarized. This has other legal issues behind it (if you were to separate for example) thus you both must realize what you are putting in writing. This is not considered legal advice so I suggest you seek additional answers if you are uncomfortable signing legal documents.
If you need assistance on either tax or mortgage needs, I specialize in both nationwide.
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2006-12-01 01:56:20 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes IRS does allowed you to deduct the mortgage payments-to gather with the interest on it and is deductible.The Mortgage lenders will allow you to pay a part or full payments,But IRS will refuse your claim -Unless the person name is appeared in a contract.
2006-11-30 14:37:04 · answer #4 · answered by Google P 2 · 0⤊ 0⤋
No, if you are married and file jointly then you can deduct your home mortgage interest paid or investment interest. However, if you are not married but YOU are paying the mortgage you cannot deduct the interest. Only the person who actually owns the home.
2006-11-30 14:37:13 · answer #5 · answered by tycoon19 1 · 0⤊ 0⤋
Usually, only the person whose name is on the W form from the mortgage company can deduct.
However, if your share is documented through an agreement (like a Partnership agreement) then you can. If the understanding is verbal, you cannot.
2006-11-30 14:35:29 · answer #6 · answered by paanbahar 4 · 0⤊ 0⤋