The IRS recently released guidance indicating that it will
follow the Ninth Circuit's ruling in Voss v.
Commissioner, 796 F.3d 1051 (9th Cir. 2015),
acquiescing to the Ninth Circuit's opinion that unmarried
domestic partners are each individually entitled to deduct interest
on up to $1,000,000 of home acquisition debt and $100,000 of home
equity indebtedness. See IRS Action on
Decision 2016-02 (August 3, 2016). The IRS's acquiescence
provides much needed clarity in a developing area of law. For more
information on the facts and decision in the
Voss case, please click
A taxpayer can deduct interest payments attributable to up to
$1,000,000 of acquisition indebtedness (attributable to the
purchase of a residence) and up to $100,000 of home equity
indebtedness (attributable to a loan secured by the home but
unrelated to the acquisition). For married taxpayers filing
separately, each taxpayer can deduct interest payments attributable
to up to $500,000 of acquisition indebtedness and up to $50,000 of
home equity indebtedness.
In the guidance, the IRS has made it clear that if co-owners are
not married, the debt limitations are applied separately to each
owner. As a result, non-married co-owners are entitled to greater
home mortgage interest deductions than married taxpayers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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