Joint Homeownership Tax Tips to Help You with Your Return

If you own a home jointly with someone else, it can be difficult to figure out who gets the deductions at tax time. Consulting a professional is always the best thing to do for any gray area. For some quick joint home ownership tax tips, keep reading.

Determining what type of joint ownership you have

First of all, it is important to know what type of co-ownership you have acquired. In a “Joint Owner with Right of Survivorship” (JTWROS) each owner is considered to have 100% ownership of the property. In this situation, if one of the tenants dies, the other is in possession of the entire property simply by removing the decedent’s name from the deed. In a “tenants in common” (TIC) situation, each person is considered to own a certain percentage of the home established at the time of purchase. This is usually a 50/50 situation, but not always since the percentages are determined by how much each contributes at the time of purchase. When a tenant dies, his share of the property passes to whoever left it, and all benefits along with it. In addition, a tenant can sell his or her part of the property without the approval of the other.

Tax Tips for Joint Home Ownership

For tax purposes, if you are a joint owner with a right of survivorship, tax-deductible expenses must be claimed by the person who actually pays them.

For married couples filing jointly, simply deduct the mortgage interest from your total combined income.

If you file separately from the other homeowner, you must claim the part of the deductions you pay and only the deductions you pay.

In a common scenario, your tax deductions should be deducted according to the percentage of property you own.

Another great joint home ownership tax tip that applies to couples is this; allow the person with the higher net income to make higher payments toward the house. This allows them to take the full deduction and improves the benefits of tax exemption in principle and interest refunded. Having one partner pay significantly more or the entire house payment can easily be offset by making the other partner solely responsible for other bills in the household.

Additional Tax Tip

To get incredible savings at tax time, many people start their own small home-based businesses. Something like an online business that you work a few hours a week can not only generate a considerable amount of additional income, but it can also provide you with huge tax deductions. When you run any type of business from your home, you can pay off a portion of your mortgage, property taxes, and utility bills. If you have an online business, you can pay off your internet, computer, and any office furniture you may need. This adds up to big savings at tax time, not to mention extra income for a rainy day!