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Mortgage Interest Deduction for Unmarried Couples

 

Mortgage Interest Deduction for Unmarried Couples, Los Angeles CPAThe Ninth Circuit Court of Appeals has recently concluded that the $ 1.1 million home mortgage interest limitation for unmarried co-owners of a qualified residence applies on a per-taxpayer basis. This reverses an earlier tax court decision, in which the limitation was applied on a per-residence basis.

The case involved California domestic partners, who had purchased a home in Beverly Hills, and obtained a $ 2.2 million dollar mortgage as part of the purchase.

Each of the partners had deducted interest on $ 1.1 million of the mortgage. The IRS and the Tax Court disallowed one-half of the deduction, but the Ninth Circuit Court reversed their decision and allowed each of the partners to deduct the interest payments.

This decision does not apply to married couples. So, as if that decision is not already complicated enough, this tax ruling adds yet another factor for couples considering marriage

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