IRS addresses mortgage interest deduction when property is owned by more than one taxpayer
The IRS recently addressed the issue of who is entitled to claim a home mortgage interest deduction where the underlying property is owned by more than one taxpayer, and mortgage payments are made by one or both of them.
In general, a deduction for interest is available only to those who are primarily liable on the underlying debt. Where, however, two or more persons are jointly and severally liable for a debt, each is primarily liable for that debt, and each is entitled to a deduction for the interest on that debt that he or she pays.
After reviewing a number of cases and rulings on the subject, the IRS concluded that funds paid from a joint account with two equal owners are presumed to be paid equally by each owner, in the absence of evidence showing that that is not the case. It also says that a person who is jointly and severally liable on a home mortgage debt is entitled to deduct all the otherwise allowable interest on that debt, provided that person actually pays all the interest.
If you have questions about your mortgage interest deduction, contact a ShindelRock tax specialist today.