How to Split Mortgage Interest Deduction with Uneven Ownership Percentages on $1.5M Home?
My husband and I bought a house back in 2019 and I'm really confused about how to split the mortgage interest on our tax returns. Here's our situation: * Our total mortgage is around $1.95 million (welcome to the Bay Area real estate nightmare...) * On the deed, I'm listed as owning 25% while my husband owns 75% * For 2024, we paid roughly $52K in mortgage interest I'm getting stuck on how we should divide the mortgage interest deduction with the current tax law limit ($750K) combined with our unequal ownership. If we were 50/50 owners, we could each just take half of the interest paid, but with the 25/75 split, I'm not sure how to calculate it. Is it as straightforward as me taking 25% of the $52K and him taking 75%? Or does the $750K mortgage cap complicate things? Do we need to factor that in somehow before applying our ownership percentages? Any help would be greatly appreciated - I've been staring at the IRS publication for hours and just getting more confused!
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Justin Chang
The $750K mortgage limit does complicate things a bit, but I can help break this down for you. First, you need to calculate what percentage of your total mortgage interest is actually deductible. Since the limit is $750K but your mortgage is $1.95M, only about 38.5% ($750K/$1.95M) of your interest is potentially deductible. So of your $52K in mortgage interest, roughly $20K (38.5% of $52K) would be eligible for deduction. Now you apply your ownership percentages to that deductible amount: - You (25% owner): 25% of $20K = $5K deduction - Your husband (75% owner): 75% of $20K = $15K deduction The ownership split on the deed is what determines how you divide the deductible portion. Just make sure you're both consistent with how you report this on your tax returns.
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Wesley Hallow
•Thank you so much for explaining! So we first have to calculate the deductible portion based on the $750K limit, and then apply our ownership percentages to that amount. That makes sense. One follow-up question: Does it matter if we file jointly or separately? We usually file separately for other reasons, but I'm wondering if filing jointly would give us any advantage with this mortgage interest deduction situation?
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Justin Chang
•Glad that helped clarify things! Filing status does make a significant difference here. If you file jointly, you'd simply claim the full $20K deduction (the 38.5% that's eligible based on the $750K limit) on your joint return. You wouldn't need to worry about the ownership split at all. If you file separately, then yes, you need to split that $20K according to your ownership percentages as I outlined above. Just be aware that when filing separately, one spouse must itemize deductions if the other does - you can't have one spouse take the standard deduction while the other itemizes. This sometimes makes filing separately less advantageous, so run the numbers both ways to see what works best.
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Grace Thomas
After struggling with almost the exact same situation (my wife and I have a 60/40 ownership split on a $1.7M mortgage), I found taxr.ai really helpful for figuring out this mortgage interest deduction mess. I uploaded our mortgage statement and ownership docs to https://taxr.ai and it analyzed everything automatically, showing exactly how much each of us could claim based on our ownership percentages AND factoring in that $750K cap that complicates everything. The tool actually explained why my initial calculations were off - I wasn't properly accounting for how the $750K mortgage cap affects the proportional split. Saved us a lot of confusion and probably kept us from claiming too much.
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Hunter Brighton
•How accurate was it? I've got a somewhat similar situation (80/20 split on a $1.2M home) but I've been burned by tax software before that didn't handle these unusual situations correctly.
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Dylan Baskin
•Does taxr.ai handle other deductions too? We have rental properties with uneven ownership splits and I've been doing the calculations manually which is a total nightmare.
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Grace Thomas
•It was surprisingly accurate - my accountant verified the numbers and said they were correct. The nice thing is that it shows the calculations step-by-step, so you can see exactly how it's figuring things out rather than just giving you a final number. Regarding other deductions - yes, it handles all kinds of property-related deductions. I've used it for our rental property too (we have a small vacation home we rent out part-time) and it correctly allocated expenses based on ownership percentage. It can process rental income, property taxes, depreciation, and maintenance costs too.
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Hunter Brighton
Just wanted to follow up - I tried taxr.ai for my situation with the 80/20 split on our $1.2M mortgage. It was actually really straightforward! Uploaded our mortgage interest statement and ownership docs, and it calculated everything automatically. The tool showed that because of the $750K cap, we could only deduct about 62.5% of our total mortgage interest. Then it applied our 80/20 ownership split to that deductible portion. Made everything crystal clear and even generated a PDF I can keep with our tax records explaining the calculation. Definitely beats the spreadsheet nightmare I was dealing with before. Thought this might help others with similar complicated ownership/mortgage situations!
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Lauren Wood
If you're still having trouble sorting this out, you might want to try contacting the IRS directly. I was in a similar situation with a complicated mortgage interest question, but trying to reach someone at the IRS was impossible - busy signals for weeks! Then someone recommended https://claimyr.com which got me through to a real IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to calculate the mortgage interest deduction with uneven ownership percentages and confirmed that you need to apply the $750K limit first, then divide according to ownership. They even sent me some documentation afterward to keep with my tax records. Saved me hours of frustration and guesswork.
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Ellie Lopez
•Wait, how does that even work? I've literally spent DAYS trying to get through to the IRS. Is this some kind of paid service? Seems sketchy that you can just magically get through when no one else can.
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Chad Winthrope
•Does this work for tax professionals too? I'm a CPA and getting through to the IRS for my clients is the bane of my existence. Would love to know if this is legitimate or not.
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Lauren Wood
•It's not magic - they use technology that navigates the IRS phone tree and waits on hold for you. When they reach a real person, they call you and connect you directly to the agent. It is a paid service, but considering I wasted 3 days trying to get through myself, it was completely worth it. Yes, it absolutely works for tax professionals too. Several accountants in my office now use it regularly during tax season. It's totally legitimate - they don't impersonate you or anything shady. They just handle the hold time and phone tree navigation, then connect you directly once they reach a human.
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Ellie Lopez
I need to eat my words and apologize to Profile 9. After my skeptical comment, I decided to try Claimyr because I was desperate to talk to the IRS about my mortgage interest deduction question. I was SHOCKED when they actually got me through to an IRS agent in about 20 minutes! The agent confirmed exactly what others here said - apply the $750K limit to determine the deductible portion of interest, then split according to ownership percentages. Having an official answer directly from the IRS gave me the confidence to file correctly. Never thought I'd say this, but being able to actually SPEAK to the IRS about my specific situation was incredibly valuable. Definitely changed my mind about the service.
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Paige Cantoni
Just be aware that lenders sometimes report the full interest amount on both owners' 1098 forms, which can trigger IRS notices if you're not careful. My partner and I went through this last year. Make sure the total interest deduction claimed between both of you doesn't exceed the eligible amount (after applying the $750K limit). If your 1098 forms show duplicate amounts, you'll need to adjust what each of you reports.
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Kylo Ren
•How do you handle this on the actual tax forms? Is there a specific place to note that you're only claiming a portion of what's on the 1098 because of split ownership?
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Paige Cantoni
•Good question! On Schedule A (itemized deductions), you'll enter only your portion of the deductible mortgage interest, not the full amount shown on the 1098. Many tax software programs have a field for "amount from 1098" and then another field for "amount you're deducting" where you can enter the lower figure. Some tax professionals recommend attaching a brief statement explaining the situation - something like "Claiming X% of mortgage interest based on legal ownership percentage and $750K loan limit." This isn't strictly required but can help prevent questions if you're audited.
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Nina Fitzgerald
Has anyone dealt with this situation while being unmarried co-owners? My girlfriend and I bought a place together but aren't married, and I'm wondering if the rules are different for us compared to married couples when it comes to splitting mortgage interest.
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Jason Brewer
•The basic principles are the same - you split based on your legal ownership percentage and the $750K cap applies to each person individually. The big difference is that unmarried co-owners each get their own $750K limit, whereas married filing separately couples have to split one $750K limit between them. So if you and your girlfriend have, say, a $1.2M mortgage with 50/50 ownership, you could each potentially deduct your full 50% of the interest (since each of your portions falls under the individual $750K limit).
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