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In the US 2 single people who jointly own a home can EACH deduct the interest on up to $1m loan. So consider having a legal agreement for joint ownership instea

In the US 2 single people who jointly own a home can EACH deduct the interest on up to $1m loan. So consider having a legal agreement for joint ownership instead. I’ve done this and deduct an extra $20k.

jcoplan 8y ago
What is the basis for saying that two single people can deduct the same interest paid? How could this possibly not be fraud? You are double claiming the interest.
- silverlake 8y ago
  No. My home loan is well over $2m. If we were married we could only deduct $1m (half the interest). As 2 single people we can deduct the interest up to $2m. It’s a wrinkle in the tax code.
- dragonwriter 8y ago
  > What is the basis for saying that two single people can deduct the same interest paid? They can't, but the maximum limit on both mortgage interest ($100K) and the indebtedness on which you can deduct interest paid ($1.1 million) apply per-taxpayer for unmarried co-owners. You still can only each deduct what you actually pay. This is a result of a 9th Circuit City decision IRS decided not to appeal that almost certainly want the intent of the law, and was not the way the law was applied prior to the decision. I'm surprised Republicans haven't framed it as a new marriage penalty and jammed a “fix” that would increase the limit for married taxpayers to double the single-taxpayer limit into one of their tax bills, since it would let them champion marriage, rail against the perfidy of the Ninth Circuit, and cut taxes on the rich all at the same time.
ThrustVectoring 8y ago
The tradeoff there is that you can no longer depreciate the portion of the house that person lives in. Not sure which is bigger, but being able to effectively push current income into the unrealized capital gains on your home is fairly attractive. On the other hand, you need to be charging market rents with the intent to try to make a profit in order to do this on your taxes, and that means keeping track of rent payments and reporting them. And any profit here could mean that what would otherwise be an untaxed sharing of expenses is now a taxed profit-seeking transaction.
fwip 8y ago
If you're buying a $2,000,000 home, you're probably not splitting it with friends to save money.

jcoplan 8y ago

What is the basis for saying that two single people can deduct the same interest paid? How could this possibly not be fraud? You are double claiming the interest.

silverlake 8y ago
No. My home loan is well over $2m. If we were married we could only deduct $1m (half the interest). As 2 single people we can deduct the interest up to $2m. It’s a wrinkle in the tax code.
dragonwriter 8y ago
> What is the basis for saying that two single people can deduct the same interest paid? They can't, but the maximum limit on both mortgage interest ($100K) and the indebtedness on which you can deduct interest paid ($1.1 million) apply per-taxpayer for unmarried co-owners. You still can only each deduct what you actually pay. This is a result of a 9th Circuit City decision IRS decided not to appeal that almost certainly want the intent of the law, and was not the way the law was applied prior to the decision. I'm surprised Republicans haven't framed it as a new marriage penalty and jammed a “fix” that would increase the limit for married taxpayers to double the single-taxpayer limit into one of their tax bills, since it would let them champion marriage, rail against the perfidy of the Ninth Circuit, and cut taxes on the rich all at the same time.

ThrustVectoring 8y ago

The tradeoff there is that you can no longer depreciate the portion of the house that person lives in. Not sure which is bigger, but being able to effectively push current income into the unrealized capital gains on your home is fairly attractive. On the other hand, you need to be charging market rents with the intent to try to make a profit in order to do this on your taxes, and that means keeping track of rent payments and reporting them. And any profit here could mean that what would otherwise be an untaxed sharing of expenses is now a taxed profit-seeking transaction.

fwip 8y ago

If you're buying a $2,000,000 home, you're probably not splitting it with friends to save money.