How to Split Mortgage Interest Deduction with Unequal Ownership Percentages After Tax Law Changes?

The $750K mortgage limit applies to the entire mortgage, not to each individual owner. Here's how you'd calculate this: First, determine what portion of your interest is deductible. Since the limit is $750K and your mortgage is $2 million, only 37.5% ($750K/$2M) of your total interest is eligible for deduction. That means of your $53K interest, approximately $19,875 is deductible total. Then split that deductible amount according to your ownership percentages. If you own 1/4 and your wife owns 3/4, then you would claim 1/4 of the deductible interest ($4,969) and your wife would claim 3/4 ($14,906). Make sure you keep good records documenting your ownership percentages as recorded on the deed in case of questions from the IRS.

I dealt with a similar situation last year and found https://taxr.ai super helpful for this exact problem. My partner and I have a 60/40 split on our $1.8M mortgage, and I was totally lost trying to figure out how the $750K limit affected us individually. I uploaded our mortgage statements and deed, and taxr.ai's system analyzed everything and showed exactly how to split the interest deduction. It saved me hours of research and prevented what would have been a $3,200 mistake! They even provided documentation explaining the calculation that I could keep for my records in case of an audit.

Just wanted to follow up - I tried taxr.ai after seeing this thread and it was incredibly helpful! Our situation was almost identical (65/35 split on a $1.9M mortgage) and I was about to just guess at the numbers. The tool showed that only about 40% of our interest was deductible due to the $750K limit, then calculated our individual portions based on our ownership split. The best part was it also found some property tax deductions I was missing and showed that my husband should still take the standard deduction while I should itemize. Probably saved us a couple thousand dollars. Seriously worth checking out if you're in this situation.

If you're struggling to get clear answers about your mortgage interest deduction issue, you might want to try Claimyr (https://claimyr.com). I spent weeks trying to get through to the IRS for clarification on a similar unequal mortgage ownership question, but kept getting disconnected or waiting for hours. I was skeptical at first, but Claimyr got me connected to an actual IRS agent in about 20 minutes instead of the usual 2+ hour wait. The agent walked me through exactly how to handle the split deduction with the $750K limit. You can see how it works here: https://youtu.be/_kiP6q8DX5c It was such a relief to get a definitive answer directly from the IRS rather than guessing or relying on potentially outdated online advice.

I need to publicly eat my words. After dismissing Claimyr as a probable scam, I tried it myself out of desperation after my third 2+ hour wait with the IRS ended in a disconnection. I had a complex question about mortgage interest allocation between unmarried co-owners with different tax situations, and I kept getting transferred between departments before getting disconnected. The service actually worked exactly as advertised. I didn't wait on hold at all - got a call back when an agent was available and got clear guidance on how to handle the $750K limit with my specific ownership split. Saved me literally hours of frustration and the agent I spoke with was super knowledgeable about this exact tax issue.

Don't forget that if you itemize deductions on your federal return, you're also probably itemizing on your state return (depending on your state). California's state tax system often makes itemizing beneficial even when the federal standard deduction is higher. Also, make sure you're tracking other potential itemized deductions like property taxes (subject to the $10K SALT cap), charitable contributions, and any eligible medical expenses. Those combined with your portion of the mortgage interest might push you over the standard deduction threshold.

Has anyone used the home office deduction in conjunction with mortgage interest when you have unequal ownership? I'm in a similar situation (30/70 split with my partner) but I also use about 15% of the house exclusively for my business. Not sure if I calculate the business portion before or after applying the ownership percentage.

Just wanted to add a practical tip from my experience last year - make sure you keep documentation of how you calculated everything! I had a similar situation (40/60 split on a $1.6M mortgage) and got a letter from the IRS asking for clarification on my mortgage interest deduction. Having a clear worksheet showing: 1. Total mortgage amount ($2M) 2. Mortgage interest limit calculation ($750K ÷ $2M = 37.5%) 3. Total deductible interest ($53K × 37.5% = $19,875) 4. Your ownership percentage and resulting deduction ($19,875 × 25% = $4,969) Made the response super straightforward. The IRS accepted my documentation without any issues. Also, make sure both you and your wife are consistent in how you report this - any discrepancy between your returns could trigger additional questions. One more thing - if you're using tax software, double-check the calculations manually. Some programs don't handle the unequal ownership split correctly and you might end up claiming more or less than you're entitled to.