Dear Tax Talk,
My ex-girlfriend and I purchased a home and have since separated — she lives in another location and refuses to pay any portion of mortgage/house expenses. Formerly, we split the mortgage interest tax deductions 50/50. Can she still claim half the mortgage interest deduction at tax time even though she no longer pays any part of the mortgage/house expenses?
Usually in your situation, I recommend that the highest-earning individual pay the mortgage and claim all the mortgage interest and real estate taxes. When you’re unmarried, each individual has a standard deduction in lieu of itemizing deductions such as mortgage interest and taxes. For simplicity’s sake, let’s say the standard deduction is $6,000 and that your home deductions are $15,000. If you each claim half, you write off together $15,000 in deductions. If instead one claims the home and the other the standard deduction, then your total write-off together is $21,000. The higher-income individual should be the one claiming the home write-off as it should produce a greater tax savings. The other individual balances the economics of the situation by paying other household bills.
Now that she’s moved out, she confronts a couple of problems with the continued write-off. First off, it is no longer her main home or a second home, such as a vacation home. Thus the interest would not qualify as home mortgage interest. Second and foremost, individuals are considered cash-basis taxpayers. An individual can only deduct what he or she pays. Because your ex won’t pay, she’s not entitled to a mortgage interest deduction or any other write-off relating to her former home.
Ask the adviser
To ask a question on Tax Talk, go to the “Ask the Experts” page, and select “Taxes” as the topic. Read more Tax Talk columns.
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.