Understanding the Home Mortgage Interest Deduction, Part Two

In my last article, Understanding the Home Mortgage Interest Deduction, Part One, I gave you an introduction to the mortgage interest tax deduction and told you what’s required to claim it. You learned about the two major hurdles you have to jump over to qualify for it:

  1. You must have secured debt on a qualified home in which you have an ownership interest.
  2. You must file your federal income taxes using Form 1040 and itemize deductions on Schedule A.

Who Can Claim Home Mortgage Interest Deduction?

We covered what a secured debt is, the types of properties that qualify for this valuable tax deduction, and other situations like what happens if you rent out your second home or have a home office. We didn’t cover the ownership interest requirement—so that’s what I’m going to focus on in part two. I saved it for last because it seems to be the piece that confuses people the most.

What if You Own a Home But Are Not on the Mortgage?

time for taxesOne of the reasons people who are eligible to claim the mortgage interest deduction don’t claim it, is because they don’t get a copy of Form 1098, Mortgage Interest Statement. Mortgage lenders are required to send out Form 1098 each year to the borrower(s) on record. It shows how much you paid in interest, mortgage insurance, and deductible points during the year.

Let’s say you own a second home at the beach with your brother. The agreement you made and put in writing was that if your brother got the mortgage, you’d be responsible for some of the minor handy work and you’d each pay 50% of the mortgage. Both your names are on the title of the property but your brother is the only one listed on the mortgage—so he’ll be the only one who receives Form 1098. But since he paid half of the mortgage payments, he’s only entitled to 50% of the mortgage interest deduction and you’re entitled to the remaining 50%.

Ideally, you should get a copy of Form 1098 from your brother to submit with your tax return. You should also:

  • write a note explaining that you’re an owner of the property even though your name isn’t on the mortgage
  • include your brother’s name and address as the person who did receive Form 1098
  • show how much of the mortgage interest each of you paid

So, it doesn’t matter who receives Form 1098—if you own a qualified home with someone else and you paid mortgage interest (and itemize deductions on Schedule A), you can claim your share of the money-saving mortgage interest tax deduction.

What if You Own a Home But Are Not on the Mortgage or Title?

Another issue that comes up is whether or not you can claim the mortgage interest deduction when you’re not on the mortgage or on the title to a property. Here’s a question that I received:

My fiancé bought a home last year but I’m not on the title since my credit was not up to par. My fiancé does not work and I pay the mortgage. My question is if there’s any way I can benefit from this on my taxes or is it a complete loss for me?

In order to claim the mortgage interest deduction, you must have an ownership interest in a qualified property and be responsible for a secured debt. You’re not allowed to claim the mortgage interest deduction for someone else’s debt. So the answer to the question depends on whether the fiancé considers you an equitable owner or a renter. Without being on the title of the property or having a written agreement that you’re an owner who is indebted for the mortgage, you cannot claim the mortgage interest deduction.

What Amount of Mortgage Interest Can Co-owners Claim?

If you own a home with someone else, the rule is that you can only claim the amount of interest that you actually paid. Here’s a question about this issue:

My girlfriend and I co-own a house together 50-50. Both our names are on the mortgage and we each pay half of it. Do we both have to claim equal amounts of mortgage interest when we itemize? Or can one claim all of it and the other not itemize?

The answer is that you can only claim the deduction for the interest you actually paid. So if each person paid 50% of the mortgage, each person is only eligible to deduct 50% of the interest. However, if one person made 100% of the payments, they could claim 100% of the mortgage interest deduction.

Here’s another question:

My name is on a mortgage with my daughter-in-law. She and my son will not itemize deductions this year, but I will. Can I claim the total amount of interest even if I haven’t lived in the house? Can they take it in future years when they itemize?

The answer is that even if you’re indebted for a mortgage, you can only deduct interest for the payments you actually made. If the daughter-in-law and son made all the mortgage payments, they are the only ones entitled to the deduction, and they can take it in any year that they itemize. Unfortunately, if they don’t itemize, no one can claim the deduction.

Important Tips for Claiming the Home Mortgage Interest Deduction

As you can see, understanding who’s eligible to claim the mortgage interest deduction can be a little tricky. To give you some additional information and frequently asked questions about who’s entitled to claim the mortgage interest deduction, I created a video that you can download at SmartMovesToGrowRich.com.

Here are some final tips that can help protect you in the event of an IRS tax audit:

  • If you co-own a property and are not listed on the mortgage, never make monthly payments to a co-owner because that could be construed as paying rent. Instead, make payments directly to the lender so your ownership interest can’t be questioned.
  • If you co-own a property but aren’t named on the deed, have your ownership interest clearly defined in a written contract.
  • If you pay someone else’s mortgage debt for them, you can never deduct the mortgage interest unless you are indebted as an owner of the property.

To learn more about other kinds of money-saving tax benefits, be sure to read my recent posts on Money Girl or listen to the audio podcast.


  1. Doable Finance says

    If you don’t get 1098 by the end of January, call the lender and they will send you one. By law, you are supposed to get one by Jan 31.

  2. Prasad Narla says

    Hi Laura,

    I just read part 2 of Understanding the Home Mortgage Interest Deduction.

    I’m almost in a similar situation. I own the home 50% and my daughter 50%. But Form 1098 is on my name. But, we claimed 100% deduction in her tax return and I gave an explanation that she is the one paying whole mortgage interest and loan (she was not in the bank loan agreement when I bought the home. Now we can’t change the agreement as the home value is less than the mortgage value). since she is claiming 100% deduction, I did not claim any deduction in my return.

    But, IRS refused to accept and disallowed her deduction. Could you please help me. I DO NOT MIND IF YOU CHARGE FOR YOUR TIME since this is a personal issue.


  3. says

    @Prasad If your daughter itemized her deductions and can prove that she made 100% of the mortgage payments, I would dispute the IRS on this. She is entitled to the deduction. Call and speak to an IRS representative to find out if you’re missing something.

    • Prasad says

      Thanks for quick reply. As a matter of fact, I did send all doc evidence such as copy of my return, City’s records showing my daughter owns 50% share and copy of title where I have added my daughter with 50% ownership etc. Yet, IRS while sending notice, DID NOT EVEN REFER OUR EXPLANATION, but simply sent a letter saying they determined her claim is DISALLOWED. They further said if we want to dispute we can appeal before the Tax Court at Washington.
      Pl advice

  4. says

    @Prasad It couldn’t hurt to have it notarized.–but I recommend that you find a local CPA who can look at your daughter’s return and all the supporting paperwork to advise you whether it’s worthwhile to push forward with a dispute. You would need to be represented by either a CPA, an Enrolled Agent (EA), or an attorney at tax court anyway.

  5. Kevin says

    Quick question. I am a renter and am currently working on fixing my credit and I am a couple of years away from being able to secure a mortgage. My landlord and I have come to an aggreement to buy the house in the future when I can secure the loan but would like to set an amortization schedule now so a portion of my monthly payment will come off the principal thus affecting the amount I actually have to finance down the road. I am wondering if there is a way I can claim some of the interest payments even though I am not on the note? Can he transfer a protion of it to me (provided we have some kind of contractual agreement stating our intentions)?

    • says

      You may be able to come up with a rent to purchase arrangement, but I would recommend having a lawyer review the contract to ensure that it spells out the rights and interests of each party. Any time you are dealing with a major financial purchase, it’s a good idea to put things in writing.

  6. danielle says

    hi I have a question my grandma passed away 3 years ago and left her house behind it wasn’t paid off so me and my husband decide to take it over and just pay the monthly payment every month. we are still both in our 20 and couldn’t get a mortgage cause we have bad credit. we get all the from to claim the taxes on the house every year but have don’t it isn’t sure if we are allowed. we make every monthly payment pay all the taxes on the house and the house insurance. are we allowed to claim it on our taxes at the end of the year?

    • says

      Danielle, I recommend visiting a tax professional for this question, and then an estate lawyer to help determine how to legally get the house in your name. This could cause problems own the road if you haven’t already done this.

  7. Kevin says

    Question? If I am in a rent to own contract should I receive a form 1098 and am able to claim the interest on the rent to own home.

  8. Buddy says

    I have a weird situation where I sold 5 duplexes on contract. The purchaser never fullfilled the contract and never paid the down payment. We did have a contract but I was paying on the orignal mortgage and everything was in my name (Taxes, title, etc.) He owned them for about 2 years and gave them back. I never gave him a 1098 but he deducted the interest and now the IRS wants him to pay. Any suggestions?

  9. tiffany says

    Have a question, me and my partner are buying a house but the loan will be just in her name but I will be on title, she is on disability and I claim her on my taxes, can I claim the interest since I claim her on taxes anyway?

  10. J says

    My elderly mom is having trouble paying her mortgage, I am considering moving in with her and make 1/2 of the monthly mortgage payments. As of now, I currently rent and have no tax write-offs and wonder if there is a way for her to add me to her deed and mortgage for tax purposes. However, I do not want this to interfere with whatever benefits she may be receiving, such as medicaid, etc. Any suggestions on how we both can benefit tax wise from my moving in and helping her with her mortgage payments?

  11. Greg Balise says

    I have a second home in my name. My mother lives at this home and pays the mortgage payments and property tax payments herself. I do not profit of the payment and its way below market value. She actually pays about $330 a month for principal and interest. Am I able to deduct the mortage interest and property tax on my taxes. She does not work and does not file any taxes. I cant seem to get a clear answer from any one I ask.

  12. RosaLinda G Dryden says

    Here is my question which I will present as scenario: I bought a 2nd home as a rental investment due to that it was within the 75 miles and did not qualify as a 2nd home. The house is actually my sister’s home and she lives in it. I am the only one on the title and on the loan. She has been making payment directly to the lender however payments are in cash. There is no written agreement of ownership between us. I have not claimed this information in my taxes. I bought the house for them due to credit issues and would not qualify for the loan.
    May I transfer the form 1098 amount to her so that she can claim it in her taxes?

  13. Huyen says

    Can my sister includes my name on the title of her property even I have bad credit? Will the lender checks my credit?

  14. Ning says

    I am a co borrower of the loans and the only one claiming 100 % of the mortgage interest deduction . But the form 1098 is not under my tax id, it ‘s under my coborrower ID number though he does not claim for it on his tax. Is this okay to put on schedule a line 10 or line 11?

  15. Marianne says

    My former BF recently got IRS audit as in 2011 I gave him my Mortgage interest on my house. They sent him a notice said his tax income mortgage deduction was more than what was reported to his name (he owns a small condo). I did give this mortgage interest amount to him in 2010 but it was not audited. Now the IRS wanted the 3500 refund back for the year 2011 income tax.

    I want to dispute as I never claimed this amount in my income tax as I made nothing during that year. Is it OK to dispute and state that he helped me paying during my depression time & loosing business after loss my late parents back to back? Or can I say I give him this mortgage interest as we had previously agreed that he would help me such following…?

    What is the best way to approach to refute this IRS refund charge back? I don’t have the money to give back, period.

    Any sounded advice? Contacted CPA & Tax attorneys who both turned down to take my case but advised to pay up. Thank you.

    • says

      Marianne, I’m not a tax professional, but so far as I know, you cannot transfer deductions to another person for tax reasons, unless you are legally married. My recommendation is to follow the advice of tax professionals. They have experience in these matters.

  16. Ann Marie says

    HELP, I think I’m getting the short end of the stick!

    I purchased my mom’s home from her in March of 2012 under an agreement of purchase that is not filed. I and have been making her mortgage payments since I do not qualify for a loan and it’s a VA loan to boot. The lawyer did not file the warranty deed putting me on the property as current owner (I filed it in January of 2014). The agreement that the lawyer wrote was that she could claim all interest and deductions from the loan payments so long as the loan is in her name. Was the lawyer correct in that she can legally claim the deductions? This will be the second year she is refusing to allow me to use the deductions and yet she is not paying gift tax or claiming it as income.

    • says

      Ann, I don’t think you can legally claim the interest deduction on a loan that isn’t in your name. This is something you will need to discuss with your lawyer and/or a tax professional.

  17. Israel says

    Hi, me & my girlfriend both purchased a property and both our names are on the 1098 form. I make about 65% of the payment for tax, mi, & mortgage but want her to claim 100% of the deduction to make things easier since I am deducting our 2 daughters. I don’t want to have to do the percentages on the the deductions . Will his be an issue in CA??


  18. james rios says

    This is helping me out a bunch but the question I have is this. I own a house but I don’t live in it. My name is still on the mortgage, I have a partner who became a middle man or third party if you will, who helped “sell” the house to my renters, and now are owners, but if they don’t pay the gentleman who is the middle man is not responsible, I am, if anyone else defaults on this loan it falls on me, I am taken off the note only in the even that the the owners living in the house refinance or the third party guy refinances, other than that it is in my name for the next 3-4 yrs. What can I claim especially since they are behind and ruining my credit. I know I probably should not have listened to others and gone against my better judgement but I did. So now what?

  19. Noemi says


    My sister and brother in-law helped me buy a house two years ago. I am not on title or mortgage but I make the mortgage payments and I can prove it. I understand that it is a challenge to deduct interest and property taxes since my name is nowhere. But if my name is added to title prior to filing taxes for 2013. Can I deduct them then?

  20. Kyle says

    Hi Laura,
    Great article, thanks.
    Can you offer guidance on the following? My wife and I live with my elderly parents. The home is in a life estate in NY with my parents as life tenants and me and my siblings as heirs.

    We are planning to add an apartment to the home (commonly known as a mother-daughter as it is only legal in our township if the apartment is for a blood relative) for my wife and I. I spoke to our bank, who advised they will write the refi mortgage (with written consent from all the heirs, which will not be a problem). My wife and I will be paying 100% of the mortgage, so I would assume that besides holding the mortgage with my parents, a letter from them stating that we have paid 100% of the mortgage will suffice? This also will surely pass the smell test for “ownership interest.”

    Any advice or thoughts are appreciated!

  21. Doug says

    My wife and I are paying on a piece of property with a mobile home on it. It’s considered one piece of property but with two addresses on it. Recently, my parents put up a modular home on the other part of the property. Currently my wife and I aren’t getting the tax benefits for the property payments/property taxes because my dad paid cash for the property and we’re paying him directly.
    I’m going to ask my dad about me being added to thier home as an owner so I can deduct the payments. Or, can I make their mortgage payments and property taxes and deduct the interest and taxes without being added as long as I can show that I am the one making all the payments?

    • says

      That is a great question, Doug. This is a situation where you should speak with a tax professional help you set up a situation where you will be lawfully eligible to make the tax deduction.

  22. david heckathorne says

    i bought my parents a home six years ago for them to live in and they still do. the home and mortgage is in my name and my name only. i get a 1098 at the end of each year for taxes and interest paid. my parents pay me no rent.

    i have never claimed a deduction of any kind for this home on my personal tax return.

    can i claim the interest paid and real estate taxes on the home?

    can i put the home on schedule e and claim all expenses and claim income what would be the fair market value as rental income?


  23. says

    My daughter and her boyfriend bought a condo together her name is not on the deed or the mortgage is she entitled to claim any interest on her income tax? Does she have any rights to this property? She contributes to the monthly mortgage payments and has put down more of a down payment for the purchase of the condo then her boyfriend.

    • says

      Mary-Lou, I’m not sure what legal rights she has if her name is not on the mortgage. This could be a sticky situation if anything happens to their relationship. I highly recommend she speak with a real estate attorney to ensure she has her name added to the mortgage if possible, or at least have a legal document drawn up that gives her legal ownership in the condo.

  24. Judy Haliburda says

    My boyfriend bought me a condo only his name on mortgage. Both names on title. Who is responsible for taxes. I have full survivorship.

  25. Marc Luna says

    Great information! My situation is similar…
    Mom is on the Mortgage, we have all 3 been added as owners on the deed. We have been giving the money to mom to pay the mortgage so we have been paying 100%. What form do we use to claim interest 1098? and can we go back the last 2 years (3 in total)?

  26. Troy says

    My ex and I divorced 3 years ago, both of our names are on the mortgage loan. She has not lived there for 3 years and I make all of the house payments. She has no financial ties to the house except that her name is still on the loan (trying to get her name off an upside down loan is hard). My question is this, per our divorce decree I have sole possesion of the house and full responsibility of payment, am I entitiled to claim the interest on my taxes being as I paid 100% of the house payments?


    • says

      Yes, Troy, you should be able to claim 100% of the interest since you have a court order that gives you sole possession of the house and full responsibility of the payment. Just be sure to keep a copy of the court order should any questions arise from the situation. It would be in your best interest to have her name removed from the loan as soon as possible, simply to prevent any future claims on the property. Best of luck.

    • says

      Heath, it depends on what you mean. How can you get them out of the house? How can you get their name removed from the mortgage paperwork? I recommend you speak with a real estate attorney who can help you with your specific situation. Best of luck.

  27. Suzy says

    My husband passed away two years ago, and I continue making monthly payments to the Lender on the house, using checks with my name on them (so the Lender and I have proofs that I have been the person who pays for the mortgage). My name is not on the mortgage, but is on the deed – which now has been awarded Years’ support by the Probate court. I have filed taxes last year as a widow and claimed the mortgage interest, and plan to do it for this year’s taxes. I understand that I will have to change my filing status to Head of Household in the years after this year (unless I am remarried). My question is, can I still continue claiming the mortgage interests in the future, when the 1098 is addressed to my late husband’s name and his SSN? Or should I refinance the house and transfer the name over to mine?

    • says

      Suzy, I’m sorry to hear about your loss. To be honest, I’m not sure you will have to refinance the house if it was awarded to you in Probate. Unfortunately, I”m not 10% certain on how the process works. My recommendation is to contact the estate attorney who closed your husband’s estate, and see what needs to be done to get the home, or loan, in your name. If he isn’t able to do it, he should be able to recommend a real estate attorney who can help you with the process. Best of luck with this.

  28. Debbie says

    Hi, I have a dilemma. I worked very little this year and own a home my name is on deed and mortgage and my domestic partner who has been living with me for 11yrs has been helping with the payments, I use some of my child support to pay what I can towards the mortgage as well. We file separately in the past and I claimed head of household as I do have a my son living with me and claim EIC. But now that I made very little this past year will I still be able to do my taxes and claim my deductions as always or would it be better if we got married we were going to anyway at some point would that make it easier and just file a joint return. I am very confused about how its going to work. I only worked 3 months out of this year making maybe 3,000 not even this year. Any help would be appreciated.

  29. Brian says

    ?I co-own a property with my son who is not named on the deed, is there a standard written contract that I can fill out to have his ownership interest clearly defined or do I have to make one up myself?

    • says

      Brian, I would contact a real estate lawyer so you can get a formal legal contract. It will save you a lot of time and money in the long run (it will also help you avoid costly probate or taxes in the event one of you dies).

  30. Ivan Amos says

    My partner and I own two vacation homes and a primary home. Both are listed as owners on all the mortgages. We share the primary mortgage payment but each pay the mortgage on one vacation house. Can we each claim the total mortgage interest, taxes on one of the vacation house plus half the primary residence?

    • says

      Ivan, I’m not sure the exact answer to your question, but your total financial situation is probably such that it is worth the investment in using a tax professional to prepare your taxes. A tax professional should be able to help you find immediate tax savings with your current situation and can help you with long-term tax planning. In the long run, you should save more than you spend on the tax preparer. I would call around and interview a couple accountants and interview them based on your financial situation. You will be better off in the long run. Best of luck!

  31. dennis says

    Me and my wife are legally separated but she and my children reside in the home . I am the only one the deed and the mortgage. Can she deduct the mortgage interest or the real estate taxes on her taxes returns? I thought that only the person that is on the secured note or mortgage can claim it.

    • says

      Dennis, my understanding is the person whose name is on the deed can claim the mortgage interest deduction if they pay the mortgage and live there. However, I’m not sure how it works in the case of a divorce or legal separation. I recommend speaking with a tax professional to make sure this is handled properly.

  32. Josh says

    My fiancé and I purchased a home last year; we share a bank account and are both eligible to claim 50%. Both of us are listed on the bank account and house title. All tax/mortgage payments are made from our joint account. My question is, would it be more beneficial for one of us to claim 100% of the taxes (the other claiming $0)? We file separately & I make about $30k more a year, so I’m not sure if it would impact the overall return to put the entire thing under her or my return.

    • says

      Josh, I can’t answer your question off the top of my head. The best way to answer your question is to run the situation through your taxes both ways. You can easily do this if you use a tax software program such as TurboTax, H&R Block @ Home, TaxACT, etc. Just don’t file until you know the best action to take.

  33. Nandha says

    I own a house in which I lived for 5 years before moving out to a different state this year in august. I was able to rent out the house starting september. Can I claim deduction of the property tax and mortgage interest in my taxes? Should I deduct them proportionately for the period I lived in that house.

    Secondly, can I offset the rent I am paying now against the rental income I am receiving from my home (mentioned above)

  34. Brian says

    Nandha, Even though others are renting your house, as long as your name is on the mortgage note and you are paying the monthly mortgage you can claim property tax and mortgage interest on your taxes each year….In regards to the rent you are currently paying there is no such thing as an offset I’m afraid, but the rental income you are receiving is regarded as income by the IRS and subject to taxes if you report it.

  35. Jessica says

    My husband and I are living with my parents. The home and mortgage is in their name. For the over a year, I have been paying the mortgage by direct transfer from my bank account to my mother’s. My parents are not filling taxes this year as they don’t have an income. They would like for us to be allowed the write-off. Is this possible? If so, what type of documentation would I need to send to the IRS?

  36. Christine says


    Hi. I read your publication and we found it very interesting and well written. However, we have a client in a similar situation and we are trying to back up claiming the interest on his home even though the home is in his parents name. He has the 1098 from the bank with his parents name on it, he is on the deed however in order to nulify the IRS we are in need of the publication number from the IRS and what it says and/or where this info was pulled from while writing your article. Thanks again for the info…Christine at the tax office

  37. Eva says

    My husband and I live in a home that is financed through my son. We have an agreement with my son that we will put the mortgage in our name and have made all the montly payments.My son doesn’t live here anymore. Can we claim the mortgage interest? Can we claim the property tax credit? if we can claim the property tax credit, how would that work since we are not renters?

  38. Sama says

    I need some help for my mortgage deduction. I am paying my mortgage in New York where my home is but I live now in ALabama. All my income is from Alabama where I lived the whole 2014. I know I can claim my mortgage interest from the federal but my question is: Can I claim the Mortgage Interest and Real State Tax in my Alabama return or not?

    Thank you

  39. Mike says

    Through a lawyer in 2012 My mother and I signed papers and tramsferring the property to my name, the agreement gives her right to live there until she dies, mortgage is in her name but i pay it. the mortgage payments get taken out of her account though, records department has me on file as owner, property interest forms comes in her name. can I claim property taxes and insurance for the home on my taxes rven if my name is nowhere there?

  40. Lori says

    Thank you for publishing this important information. My ex-husband and I entered into a business deal for the purchase of a home. A contract was drawn that shows it is my primary residence and that I would be paying all mortgage, taxes and Homeowners Insurance. I am not on the mortgage, but I am on the title/deed. I have been paying the mortgage for 4 years and he has been writing off the interest from his income taxes. I had asked if I could use the write-off and he said no. I did not know the law and did not want to jeopardize my own tax filing so I did not pursue.

    Long story short, is there some sort of real tax law, like RCW, that I could refer to so that I can let him know, with legal fact, that I will be writing off the interest from now on as I am the only one making the payments?

    Thank you.

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