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Question About Cohabitation and Mortgage Interest
Old 10-07-2018, 01:33 PM   #1
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Question About Cohabitation and Mortgage Interest

I am doing some planning around taxes post-FIRE in a few years. Currently, DBF and I are co-habitating, but I own the house (title is only in my name). There is a mortgage at 3.5% fixed (in my name only) that I may opt to keep post-FIRE. DBF will continue working for another 8-10 years.

Currently, I pay the mortgage from my account, and DBF pays me $800 per month as a contribution (in addition to splitting other day-to-day expenses). At tax time, I take the full mortgage interest deduction.

Post-FIRE, I will have little to no 'income' except for some Roth conversions. I may opt to get health insurance through his megacorp (they offer domestic partner benefits), but he would have imputed income that would be taxed at a fairly high bracket. He has no other deductions except for alimony, and state income tax (up to the $10K limit).

Is there a way we could adjust which of us takes which deduction? Specifically, could he be eligible to take a proportionate share of the mortgage deduction to offset the imputed income from the health insurance? We could switch the mortgage payment to our joint account, and each deposit our share into the account for the payment, if that matters.

I would talk to a CPA before we did this, but if this is completely impossible (because the house and mortgage are solely in my name), then there is no need to consult a CPA and I may just cover his tax liability for the health insurance.

I live in CA if that matters, and we are NOT registered domestic partners.

Thanks in advance for any insight.
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Old 10-07-2018, 02:40 PM   #2
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Per IRS Pub 936, to be able to deduct mortgage interest, an individual must have an ownership interest in the home. Based on the facts presented, your DBF (first time I've encountered that acronym) has no ownership interest thus can not deduct mortgage payments.
And you can only deduct those payments that you actually paid. If he makes payments, you can not deduct that portion of the interest.

https://www.irs.gov/publications/p93...link1000229900
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Old 10-07-2018, 03:08 PM   #3
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Thanks, RE2Boys, that answers my question.
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