Deduction Dangers, Part 1: Mortgage Interest

Avoid 3 common mistakes when claiming the mortgage interest deduction.

Laura Adams, MBA
5-minute read
Episode #260

Mistake #3: Claiming the Wrong Deduction Amount

The third common mistake with the mortgage interest deduction is claiming too much of your share. Here’s a common question from a reader named Walt:

My partner and I co-own a home and each pay 50% of the mortgage. I’ll have enough total deductions to itemize, but she won’t. If she claims the standard deduction on her tax return, can I claim 100% of the interest deduction on my return?

If you own a home with a spouse and file taxes together, you can claim the total amount of mortgage interest on a joint tax return. However, if you’re married and file taxes separately, or you have a mortgage with someone who isn’t your spouse, you can’t pool the deduction.

As I previously mentioned, each borrower can only claim the interest that he or she paid during the year. So Walt can only claim 50% of the mortgage interest.

It’s important to take advantage of every tax break that you can because they legally reduce the amount you have to pay the government. So, if you own a home or a portion of a home, be sure to deduct your allowable mortgage interest. If you have a complicated situation, it’s a good idea to consult with a qualified tax accountant.

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.