Here’s a new reason to just cohabit – if you and your loved one have a huge mortgage.
If you or your clients happen to be blessed as a high-income couple, it’s likely your taxes will go up. Your combined income might require you to pay a higher federal tax bill than would’ve been owed had you stayed single.With a change in IRS rules last year, an unmarried couple can deduct twice as much of their mortgage- and home-equity-debt interest than a married couple can.
In a court case that they lost, the IRS was forced to agree that the limits on deductions for mortgage interest – $1 million of mortgage debt plus $100,000 in home-equity financing – apply on a per-taxpayer basis, not a per-residence basis. So, a married couple is considered one taxpayer; an unmarried couple, two. That means an unmarried couple could deduct interest on a combined $2.2 million of mortgage debt.
