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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 1072
Experience:  Tax Preparer for 16 years; 25+ years experience as a real estate/corporate paralegal.
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The mortgage interest deduction is limited by the indebtedness

Customer Question

The mortgage interest deduction is limited by the indebtedness size of $1,000,000 if married filing jointly and $500,000 if married filing separately.
We are married filing separately and have a mortgage over $1,000,000. Can I take a deduction for mortgage interest corresponding to $500,000 part of mortgage and my spouse take another deduction corresponding to another $500,000 part of this same mortgage? The mortgage and the house is in my name only, but I can have my spouse pay her part of the mortgage from her separate bank account.
Submitted: 12 months ago.
Category: Tax
Expert:  Barbara replied 12 months ago.

Welcome. My name is XXXXX XXXXX it will be my pleasure to assist you with your tax question today.

 

When you use the married filing separately filing status, if one spouse itemizes, the other must itemize also. In your situation, you can each itemize your respective portion of the mortgage interest on each of your tax returns as long as the total amount itemized does not exceed the actual amount of interest.

 

Please let me know if you require further information or clarification.

 

Thank you and best regards,

Barb

Customer: replied 12 months ago.

Thank you for your answer.


Just to make sure, does it not matter that the mortgage is in my name only, so technically the spouse "does not have legal obligation to pay" as IRS puts it?


 

Expert:  Barbara replied 12 months ago.

Hi, Anton.

 

Thank you for your follow-up question.

 

There are many instances where a mortgage is in the name of one spouse as opposed to both. If you are both paying the mortgage, you each can deduct your respective portion of the mortgage interest. For instance, if the total mortgage interest paid for the year is $15,000 and you each paid $7500, you would each be able to deduct $7500 for mortgage interest.

 

By the way, you each would also be able to deduct 1/2 of the real estate taxes paid for the property and 1/2 of PMI paid (if any).

 

Barb

Customer: replied 12 months ago.

Thank you! That's good new. Does she need to actually pay her part from her own account or is it ok if I pay the entire mortgage payment myself?

Expert:  Barbara replied 12 months ago.

From a recordkeeping standpoint, it would be best if you each pay your respective amounts from your own accounts. If you pay the entire mortgage, and she reimburses you from her account, that would suffice since you both would have records of payment.

 

Barb

Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 1072
Experience: Tax Preparer for 16 years; 25+ years experience as a real estate/corporate paralegal.
Barbara and 3 other Tax Specialists are ready to help you
Customer: replied 12 months ago.

Thanks!

Expert:  Barbara replied 12 months ago.

Hi, Anton.

 

Just a short note to thank you for the "excellent" rating and very generous bonus. Both are most appreciated.

 

If you have any questions in the future, please remember to put "for bkb1956 or Barb" in the subject line, and I will be happy to assist you. Recommendations to family, friends and colleagues are also always appreciated.

 

Thanks again and best regards,

Barb

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