Couples sharing a residence frequently ask, "How do non-married couples claim their home on taxes?" The question is less about taxes and marriage and more about the names on the mortgage document. Taking a tax credit on federal and state taxes doesn't require any special paperwork, unless, of course, you're audited by the federal Internal Revenue Service. You'll need a copy of your mortgage agreement, your payments and your grant deed for the audit.
- Fill out the loan papers. How non-married couples claim their home on taxes involves a decision when buying a property and filling out the loan papers. A homeowner's deduction on state property taxes is given to people living in a home that includes their name on the purchase papers and on the home loan. If two unmarried folks buy a home, both names should be on all of the paperwork.
- Decide on the wording for the grant deed. The grant deed records the name of the owners. Deciding how non-married couples claim their home on taxes asks for a choice of recording. The options depend on the state where the house was purchased. The choices include: "single," "married" or "unmarried." Single folks have never been married and "unmarried" means you may be married but are holding the property as sole ownership. A "married" designation means that a spouse may be entitled to take the property in the event of death or divorce, even if the spouse's name is not also on the deed. The non-married couple may hold title in different ways. For instance, one member of the couple may designate "single" and the other "unmarried."
- Decide on the holding. Unmarried folks might want to hold the house as "joint tenants." That means if one person dies, the property automatically transfers to the other without a will. "Tenants in common" is another option for holding a grant deed. This term is used to allow each person the right to use their half any way they want. It can be willed to someone else or donated to a charity without comment by the other tenant.
- Make regular monthly payments. If you want to make sure the ownership is joint and even and record keeping is easy, pay the same amount of the monthly payments, repairs and taxes on the house. If a different financial arrangement is made, keep accurate records as to who paid what, the amount and when the money was paid. Inquiring minds at the IRS might want to know.
- File the taxes. File taxes on time and divide the amount between the two non-married folks. The amount doesn't need to be even, but if it's not, make sure the totals are accurate and are documented. Make sure there isn't any overlap in declaring the tax deduction. Double dipping is a sure flag for a major, and ugly, audit.
"Mortgages for Dummies," Eric Tyson and Ray Brown, 1999.
What Others Are Reading Right Now.
Acting, comedy and strong spirits converge in Speakeasy. When host Russell Peters interviews entertainers about all sorts of topics, neither the drinks nor the conversation is wate …
Warning! 7 Lies All Women Tell Men
Prep for these fibs. Ladies will thank you, and that’s the truth.
The 7 Best Exercises to Build Arms That Turn Heads
Because who doesn’t want wicked big guns?