Mortgage Interest Deductions for Unmarried Couples

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Background: Generally, for income tax purposes an individual or married couple may deduct interest on up to $1.1 million of “qualified residence” indebtedness.

For example, consider a married couple, taxpayers A and B, who buy a personal residence and incur $3.3 million of qualified residence debt bearing interest at 3% per year. Of the $99,000 of annual interest, $33,000 would be deductible, based on the 3% rate on the $1.1 million debt limitation.

Note: Following a Supreme Court case in 2013, same-sex couples who marry under state law are deemed “married” for federal income tax purposes and, as such, are also subject …read more

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