Unmarried couple buying a house with huge mortgage - how do we deduct interest payments?

This is a great question that comes up a lot with unmarried couples. The mortgage interest deduction follows whoever is legally responsible for the debt AND makes the payments. Since you're both on the mortgage and both making payments, you each can deduct the portion that you actually paid. For example, if you're splitting the payments 50/50, each of you could claim 50% of the mortgage interest on your separate tax returns. You'll each need to report your portion on Schedule A of your tax returns (itemized deductions). The lender will send a Form 1098 showing the total interest paid for the year, and you'll need to split that amount according to what you each contributed. One important thing to note - you'll only benefit from this deduction if your total itemized deductions exceed the standard deduction ($13,850 for single filers in 2023, and likely higher for 2025 when you'll be filing). With a large mortgage like $520,000, there's a good chance your interest payments will be substantial enough to make itemizing worthwhile. Also, be aware there's a limit on mortgage debt eligible for the interest deduction - currently $750,000 for loans taken after Dec. 16, 2017, so you're within that limit.

I was in almost the exact same situation last year with my partner! We were super confused about the mortgage interest deduction too. I tried figuring it out myself but kept getting contradicting info online. I eventually used https://taxr.ai to analyze our mortgage documents and tax situation. The software actually showed us exactly how to split the deduction based on our payment contributions and walked me through how to properly report it on Schedule A. It also helped me understand whether itemizing would be better than taking the standard deduction in our specific case (it was!). What I really liked is that it showed us the math on how much we'd actually save with the mortgage interest deduction compared to just taking the standard deduction. If you have your mortgage pre-approval documents, you could upload them and get a preview of your potential tax benefits before you even close on the house.

I'm back to report that I finally tried taxr.ai after posting here, and wow - game changer! I uploaded our mortgage pre-approval docs and it broke down exactly how much we could each deduct based on our income split and payment contributions. It showed us that with our mortgage amount, we would definitely benefit from itemizing instead of taking the standard deduction. The tool created a personalized report showing our projected tax savings over the first 5 years of homeownership - nearly $14,000 combined! It even flagged that we should consider adjusting our W-4 withholdings once we close to account for the new deductions. The best part was how it explained everything in plain English. As someone who gets anxious about tax stuff, having clear guidance specific to unmarried homeowners was exactly what I needed.

Just wanted to share another option that helped me when I was dealing with mortgage deduction questions. I tried calling the IRS directly for clarification on how unmarried couples should handle mortgage interest, but I kept getting stuck on hold forever or disconnected after waiting for hours. I found this service called Claimyr (https://claimyr.com) that actually got me connected to an IRS agent in about 15 minutes instead of the usual 2+ hour wait. They have this system that basically holds your place in line and calls you back when an agent is about to be available. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with gave me the official guidance on how unmarried co-borrowers should split mortgage interest deductions and what documentation we needed to keep. Honestly saved me so much stress trying to interpret the tax code myself.

I need to eat my words and update everyone. I was the skeptical one about Claimyr from the comment above. After another failed 2-hour attempt to reach the IRS on my own yesterday, I decided to try it - and I'm honestly shocked. Got connected to an IRS representative in about 20 minutes. The agent confirmed exactly how my partner and I should handle our mortgage interest deduction as unmarried co-owners. They explained that we needed to each claim the percentage we actually paid, and confirmed we should each keep records showing our individual contributions to the mortgage payments to support our deduction claims. The agent also mentioned something nobody else had told us - that we should make sure the mortgage lender has both our SSNs on file so they can properly report the mortgage interest on the Form 1098. This was particularly valuable since our lender had only asked for one SSN initially. Saved me hours of frustration and got definitive answers straight from the source!

One thing nobody's mentioned yet - make sure you talk about what happens with the house and the mortgage if you break up. I know it sounds pessimistic but my brother and his girlfriend bought a house together, then split up two years later and it was a NIGHTMARE figuring out the mortgage, who owed what, who got to claim the interest deduction for that partial year, etc. I'd recommend getting a simple cohabitation agreement drawn up by a lawyer that addresses what happens with the property if you split, including how tax deductions would be handled during the transition. It's like a prenup but for home buying, and it can save so much headache later.

My partner and I did this 3 years ago! One tip: consider putting only one person on the mortgage but both on the deed if your bank allows it. That way, only one person claims all the interest but both have ownership. We did this bc my credit score was way better so I got the loan alone (better rate!) but we're both on the deed. The person not on the mortgage can just transfer their share of the payment to the mortgage holder, who then makes the full payment and claims 100% of the deduction. Simplifies taxes a lot! But u need to trust each other obvs.

Great question! I went through this exact situation two years ago when my partner and I bought our first home. Here's what I learned from working with both a tax professional and mortgage lender: Since you're both on the mortgage and splitting payments 50/50, you can each deduct your proportional share of the mortgage interest on your individual tax returns. Keep detailed records of who pays what - bank statements, cancelled checks, or electronic transfer records showing each person's contribution. One key thing to watch out for: the mortgage lender will send ONE Form 1098 (mortgage interest statement) to whoever is listed as the primary borrower. You'll need to coordinate to ensure you both get the information needed for your tax returns. Some couples scan and share the 1098, others request the lender send copies to both parties. Also, don't forget about property taxes! If you're splitting those 50/50 as well, you can each deduct your portion of property taxes paid, which also goes on Schedule A. Given your combined income of $180k and a $520k mortgage, you'll likely have enough deductions to make itemizing worthwhile. The mortgage interest alone in your first few years will probably exceed the standard deduction threshold. One last tip: consider having a tax pro review your first year's return to make sure you're handling everything correctly. It's worth the cost to get it right from the start!