Jump to content
The forums have been archived and are now read only. Years of great info saved for your reading pleasure. Thank you! Visit us on Facebook: https://www.facebook.com/NakedInvestor/ ×
The Naked Investor Forums
munruss

House/Mortgage Question

Recommended Posts

Situation:

1 house, 5 people

All 5 people are on the title of this one house.

2 people will be on the mortgage.

 

My question is, who can claim this house on their taxes and in what way? I thought that the people that are involved with the mortgage can claim 50% each on their yearly taxes. Is this correct? Or, can all five people claim 1/5 on their yearly taxes?

Share this post


Link to post
Share on other sites
The people who actually make the mortgage payments get to claim the tax deduction.

 

 

Hello Dave. Are the people that are on the title also considered to be on the mortgage?

 

Let's say five people are on the title and only two people are listed on the mortgage (as taking a loan for it). Who can claim? Is it all five people or only those named on the loan?

Share this post


Link to post
Share on other sites

Of the five people involved here, who is actually making the mortgage payment? That person or persons get the tax deduction. Does not matter who is on title, does not really matter who is on the note, what only matters is who is writing the checks.

Share this post


Link to post
Share on other sites
Of the five people involved here, who is actually making the mortgage payment? That person or persons get the tax deduction. Does not matter who is on title, does not really matter who is on the note, what only matters is who is writing the checks.

 

Of the five people, 2 will be on the mortgage. the other will be on the title. If I fully understand you dave, you're saying that the two people that are listed on the mortgage can claim a tax deduction. can everyone claim depreciation of the house? since there will only be 2 people listed on the mortgage and someone else that is not listed on the mortgage is writing the checks to the mortgage company, is that person entitled to anything?

Share this post


Link to post
Share on other sites

You did not say this is an investment property, so I assumed it was a primary residence for the five persons involved and that is how I have framed my response.

 

If this property is a primary or second home, ignore who is on the note. Forget who is on the title. From the way you framed your original question, there are five people living in this house. Of those five, I assumed that at least one must be paying the mortgage company.

 

Only the person (or persons) who are actually paying the mortgage get to take a home mortgage interest tax deduction and a property tax deduction. If people on the mortgage note are not making the payments themselves, they are NOT entitled to a tax deduction. Does not really matter who is on title.

 

I ask again. Who is actually writing the checks to the mortgage company. Only that person can take a deduction for the mortgage interest. AND, that person can only take the deduction if they itemize their deductions on Schedule A.

 

Depreciation does not apply to an owner occupied property.

 

If this is not an owner occupied property, but rather an investment property, then I would defer to the partnership operating agreement as it should define how tax deductions will be handled.

Share this post


Link to post
Share on other sites
The people who actually make the mortgage payments get to claim the tax deduction.

 

Dave thats correct in addition you might want to say only one person can take the deduction.

Share this post


Link to post
Share on other sites

Craig,

 

If two or more people are sharing the mortgage payment, then each gets to take a deduction in proportion to their respective contribution. If all five share the payment equally, then each is entitled to a one-fifth share of the deductions.

 

However, to take the deductions, each must be able to itemize.

Share this post


Link to post
Share on other sites
Craig,

 

If two or more people are sharing the mortgage payment, then each gets to take a deduction in proportion to their respective contribution. If all five share the payment equally, then each is entitled to a one-fifth share of the deductions.

 

However, to take the deductions, each must be able to itemize.

 

Dave, the people in the house will not live in it. I guess you can say that it is an investment property. Now, if I fully understand you, it doesn't matter whose name is on the mortgage, it matters who actually writes the check? For example, person A & B are on the mortgage, but person C cuts the check. Person C can claim, correct?

Share this post


Link to post
Share on other sites

Correct, however, if there are five people participating in this "investment", then I would hope that they have formed a partnership. Their partnership agreement will specify how the tax benefits will be allocated to the individual partners.

 

In the absence of a formal partnership agreement, then the person actually making the mortgage payment gets the mortgage interest deduction and probably the property tax and hazard insurance deduction if taxes and insurance are escrowed.

Share this post


Link to post
Share on other sites
Correct, however, if there are five people participating in this "investment", then I would hope that they have formed a partnership. Their partnership agreement will specify how the tax benefits will be allocated to the individual partners.

 

In the absence of a formal partnership agreement, then the person actually making the mortgage payment gets the mortgage interest deduction and probably the property tax and hazard insurance deduction if taxes and insurance are escrowed.

 

Dave, thank you very much for your help.

Share this post


Link to post
Share on other sites

×
×
  • Create New...