Mortgage Interest Deduction for Co-Owners: Who Can Claim It?
You and your best friend bought a house together.
You both contributed toward the down payment, signed the mortgage, and agreed to split the monthly expenses.
Everything has been going smoothly.
Then tax season approaches.
Your friend receives a Form 1098 from the mortgage lender showing how much interest was paid during the year.
There’s just one problem.
The form has your friend’s name on it.
Not yours.
Now you’re wondering whether your friend gets to claim the entire mortgage interest deduction simply because the tax statement was issued in their name.
After all, you’ve been paying half the mortgage.
Shouldn’t you receive some of the tax benefit too?
This is one of the questions people encounter when purchasing property with someone outside marriage.
And it’s why understanding the mortgage interest deduction for co-owners is an important part of shared homeownership.
The answer depends on several factors, including your legal ownership, mortgage obligations, actual payments, and whether you itemize deductions.
The good news is that receiving Form 1098 isn’t necessarily what determines whether someone can claim a deduction.
Here’s how the rules work, what changed for the 2026 tax year, and what co-buyers should understand before filing.
Can Both Co-Owners Claim the Mortgage Interest Deduction?
Yes. Two eligible co-owners can generally deduct their respective shares of qualifying mortgage interest when they are jointly responsible for the mortgage and each pays part of the interest. Each must itemize deductions on their own federal tax return to claim the deduction. If only one co-owner receives Form 1098, the other may still report their qualifying share using the appropriate Schedule A instructions.
The Internal Revenue Service directly addresses this situation.
In its guidance for unmarried homeowners sharing a mortgage, the IRS explains that eligible co-owners can each report the portion of qualifying mortgage interest and property taxes they paid.
This remains true even when the lender sends Form 1098 to only one owner. IRS
However, there are important conditions.
You cannot automatically claim half the deduction simply because you own half the property.
You also cannot assume that the person whose name appears on Form 1098 can claim everything.
The deduction generally depends on the qualifying expense, who paid it, and the applicable tax rules.
What Is the Mortgage Interest Deduction?
The mortgage interest deduction allows eligible taxpayers who itemize deductions to deduct qualifying interest paid on certain mortgages secured by their homes.
It generally applies to qualifying mortgage debt used to buy, build, or substantially improve an eligible residence.
This is different from deducting the entire mortgage payment.
Your monthly mortgage payment may contain several components.
These can include principal, interest, property taxes, and homeowners insurance.
Not all of those expenses qualify for the same tax treatment.
For example, the principal portion of an ordinary home mortgage payment is not deductible as mortgage interest.
The IRS explains the eligibility requirements and limitations in Publication 936, Home Mortgage Interest Deduction.
For co-buyers, the important question is how the qualifying interest is divided between people who share the property and mortgage.
1. Understand Who Is Eligible for the Deduction
Before calculating the mortgage interest deduction for co-owners, it’s important to understand the difference between owning a property and being responsible for its financing.
These are related but separate legal arrangements.
Mortgage Borrowers and Legal Owners
Imagine Maya and Jordan purchase a home together.
Both names appear on the deed.
Both are borrowers on the mortgage.
They contribute equally toward the monthly payment.
This is a relatively straightforward co-ownership arrangement for purposes of determining their respective mortgage interest contributions.
However, not every transaction has the same structure.
One person might appear on the mortgage without holding legal title.
Another might hold an ownership interest without being personally obligated on the mortgage note.
These situations may require additional tax analysis.
For ordinary jointly owned and jointly financed homes, the IRS generally looks at the taxpayer’s legal obligation, qualifying ownership interest, and actual payments.
Certain exceptions involving equitable ownership can also apply, so unusual arrangements should be reviewed individually.
For a broader explanation of how these responsibilities differ, see Pairgap’s guide to co-borrowers, co-signers, and co-owners.
Does Everyone on the Mortgage Automatically Get a Deduction?
No.
Being named on a mortgage does not automatically create a deductible expense.
The taxpayer must satisfy the applicable requirements.
For example, a co-borrower who doesn’t pay any mortgage interest during the year generally cannot simply claim half the interest because they’re named on the loan.
Likewise, someone who paid interest may not receive an additional tax benefit if taking the standard deduction is more advantageous.
The important distinction is between being legally connected to a mortgage and having an eligible expense that can reduce taxable income.
2. How Do Co-Owners Split Mortgage Interest Deductions?
A common question about the mortgage interest deduction for co-owners is whether the deduction should match each person’s ownership percentage.
For example:
If Maya owns 60% of a property and Jordan owns 40%, should Maya automatically claim 60% of the interest?
Not necessarily.
The mortgage interest deduction generally follows qualifying interest payments rather than simply mirroring ownership percentages.
Example: Two Friends Split Mortgage Interest Equally
Imagine Maya and Jordan jointly own a home.
Both are legally responsible for the mortgage.
They contribute equally to a joint account used to make the payments.
During the tax year, the mortgage lender receives $18,000 in qualifying interest.
Their contributions are:
| Mortgage Interest | Maya | Jordan |
| Total annual interest | $18,000 | |
| Percentage contributed | 50% | 50% |
| Interest paid by each person | $9,000 | $9,000 |
Assuming all applicable deduction requirements are met, each may generally report $9,000 in qualifying mortgage interest on their individual return.
Neither should claim the entire $18,000.
The combined deductions should not improperly duplicate the same interest expense.
What if One Co-Owner Pays More?
Now suppose Maya contributes 70% of the mortgage interest.
Jordan contributes 30%.
Their actual qualifying contributions may look like this:
| Mortgage Interest | Maya | Jordan |
| Total annual interest | $18,000 | |
| Percentage contributed | 70% | 30% |
| Interest paid by each person | $12,600 | $5,400 |
Assuming the contributions genuinely represent qualifying interest paid by each person, these amounts may form the basis of their respective deductions.
However, the IRS may require appropriate documentation.
If payments come from a shared account containing funds from both owners, the allocation must reflect the actual arrangement and supporting records.
Co-buyers should not arbitrarily assign all mortgage interest to whichever person expects the greatest tax benefit.
Does Unequal Ownership Change the Calculation?
Not automatically.
Property ownership percentages and mortgage interest contributions are separate considerations.
For example, Maya may own 60% of a property while agreeing to fund half the mortgage payments.
Her tax treatment should not be determined solely by the 60% ownership figure.
This is one reason co-buyers should understand their title structure.
Pairgap’s guide to tenancy in common explains how two or more people can hold different ownership percentages in the same property.
When preparing tax returns, the owners should review their actual qualifying payments and the applicable IRS rules.
3. What Happens When Only One Co-Owner Receives Form 1098?
This is one of the most common sources of confusion.
Imagine two unmarried friends jointly purchase a home.
Both contribute toward the mortgage.
But at the end of the year, only Maya receives Form 1098.
The statement shows the total amount of mortgage interest paid during the year.
Jordan worries that he won’t be able to claim his share because the lender didn’t send him a separate statement.
However, this doesn’t automatically prevent Jordan from claiming an eligible deduction.
What Is Form 1098?
Form 1098 is the mortgage interest statement generally provided by a mortgage lender or servicer when the applicable reporting requirements are met.
It reports mortgage interest received during the year and other relevant information.
When multiple borrowers share one mortgage, the lender may issue the statement under one borrower’s identifying information.
That doesn’t necessarily determine how the deduction should be divided.
How Does the Person Receiving Form 1098 Report Their Share?
Under the IRS’s published Schedule A instructions for 2025 returns, a taxpayer who receives Form 1098 and shares qualifying mortgage interest with another eligible borrower reports only their own deductible share on Schedule A, line 8a.
The taxpayer should also communicate the appropriate allocation to the other borrower.
How Does the Other Co-Owner Report Their Share?
Under those instructions, the eligible co-borrower who did not receive Form 1098 generally reports their qualifying share on Schedule A, line 8b.
The taxpayer identifies the person who received the statement.
Additional explanatory information is required for paper-filed returns.
These rules are addressed in the IRS’s Schedule A instructions.
Because these are the published instructions for 2025 returns, taxpayers filing their 2026 returns in 2027 should confirm the final 2026 instructions before filing.
Should Co-Owners Request Separate Forms?
They can ask their lender about available documentation.
However, receiving separate Forms 1098 is not necessarily required for eligible co-owners to report their respective interest payments.
The more important issue is maintaining records that accurately establish how payments were funded.
What If One Person Sends Money to the Other?
Suppose Jordan sends Maya $1,500 each month.
Maya then pays the entire mortgage from her personal bank account.
The bank statement may show Maya making the mortgage payment.
But Jordan has also contributed funds.
That arrangement should be documented.
The co-buyers should maintain records of Jordan’s transfers, the mortgage payments, and their agreed financial responsibilities.
When contributions are mixed with other personal expenses, determining which funds paid qualifying mortgage interest may require additional accounting.
This is particularly important when two people do not contribute equally.
4. Does the Mortgage Interest Deduction Actually Save Co-Owners Money?
Not necessarily.
This is one of the most important parts of understanding the mortgage interest deduction for co-owners.
A qualifying deduction does not automatically result in lower taxes.
To benefit from mortgage interest as an itemized deduction, a taxpayer generally needs to itemize rather than take the standard deduction.
And itemizing may not be the most advantageous choice.
What Is the Standard Deduction for 2026?
The IRS has established the following standard deduction amounts for the 2026 tax year.
| Filing Status | 2026 Standard Deduction |
| Single | $16,100 |
| Married filing jointly | $32,200 |
| Head of household | $24,150 |
| Married filing separately | $16,100 |
These figures are from the IRS’s official 2026 inflation adjustments. IRS
Additional rules may apply to certain taxpayers.
For unmarried co-buyers who file as single taxpayers, each generally evaluates their own itemized deductions against their applicable standard deduction.
Example: Two Friends Split $18,000 in Mortgage Interest
Return to Maya and Jordan.
They jointly own a property and split qualifying mortgage interest equally.
Their total annual mortgage interest is $18,000.
They also pay $8,000 in qualifying property taxes, divided equally.
Their figures look like this:
| Eligible Expense | Maya | Jordan |
| Mortgage interest | $9,000 | $9,000 |
| Property taxes | $4,000 | $4,000 |
| Combined expenses | $13,000 | $13,000 |
Assume both are single taxpayers and have no other itemized deductions.
Each has $13,000 in potential itemized deductions.
But the 2026 standard deduction for a single taxpayer is $16,100.
In this hypothetical situation, each would generally benefit more from claiming the standard deduction.
Their mortgage interest and property tax expenses do not provide an additional federal itemized-deduction benefit.
What if One Person Has More Itemized Deductions?
Suppose Maya also paid $5,000 in qualifying state income taxes.
Her total potentially deductible expenses would increase to $18,000.
Jordan’s would remain $13,000.
Assuming no limitations reduce Maya’s eligible deductions, itemizing $18,000 may be more advantageous for her than claiming the $16,100 standard deduction.
Jordan may still benefit more from the standard deduction.
The important point is that two people who own the same property can have different tax outcomes.
Their filing status, qualifying expenses, and other tax circumstances may differ.
A deduction reduces taxable income when properly claimed. It does not provide a dollar-for-dollar tax refund.
5. Can Co-Owners Also Deduct Property Taxes?
Potentially.
Qualifying state and local real property taxes may be deductible when taxpayers itemize.
However, the deduction is subject to federal limitations.
For co-buyers, the allocation of qualifying property taxes generally depends on the applicable legal obligations and actual payments.
How Should Property Taxes Be Split?
Imagine Maya and Jordan jointly own a home.
Their annual property tax bill is $6,000.
They contribute equally toward the tax payments.
Assuming the property taxes qualify and both owners meet the relevant requirements, each may generally report $3,000 in qualifying property taxes.
But what if Maya pays the entire bill?
The appropriate allocation may differ.
The owners should document who actually funded the payment and review their legal responsibility for the tax.
What Changed for Property Tax Deductions in 2026?
For the 2026 tax year, the federal deduction limit for qualifying state and local taxes is generally $40,400.
The limit is reduced for certain higher-income taxpayers.
According to the IRS, the reduction begins when modified adjusted gross income exceeds $505,000, or $252,500 for married individuals filing separately.
The deduction cannot fall below the applicable statutory minimum because of that income-based reduction. IRS
However, the $40,400 figure is not a special property-tax deduction.
It is a combined limit covering qualifying state and local income, sales, and property taxes.
It also doesn’t mean every homeowner can automatically deduct $40,400.
The taxpayer must have eligible expenses, satisfy the applicable requirements, and itemize to receive the corresponding itemized-deduction benefit.
Do Mortgage Escrow Payments Count Immediately?
Not necessarily.
Many borrowers pay property taxes through an escrow account managed by their mortgage servicer.
The amount deposited into escrow is not necessarily the amount paid to the taxing authority during that year.
For tax purposes, eligible property taxes generally relate to amounts actually paid to the taxing authority during the tax year.
Co-buyers should review their mortgage statements and property tax records before preparing their returns.
6. Which Shared Homeownership Expenses Are Not Deductible?
Not every expense associated with owning a home qualifies for a federal tax deduction.
This is important because co-buyers often establish one monthly budget covering several different types of expenses.
For example, Maya and Jordan may contribute money toward the mortgage, insurance, utilities, and a maintenance reserve.
Those expenses should not automatically be treated as deductible mortgage interest.
Mortgage Principal
The amount used to repay mortgage principal is not the same as interest.
Ordinary principal payments reduce the outstanding loan balance.
They generally do not qualify for the home mortgage interest deduction.
Homeowners Insurance
Ordinary homeowners insurance premiums for a personal residence generally aren’t deductible as home mortgage interest.
Insurance premiums may still be a necessary part of the cost of owning the home.
But that doesn’t automatically make them deductible.
Utilities
Electricity, water, internet, and ordinary household services are generally personal expenses.
Paying them does not ordinarily create a federal homeowner tax deduction.
Routine Maintenance
Ordinary maintenance and repairs to a personal residence generally aren’t deductible as current personal expenses.
However, certain improvements may affect the property’s tax basis, and special circumstances can involve different rules.
Co-buyers should maintain records of significant improvements and ask a tax professional whether those costs have implications for a future sale.
Pairgap’s guide to splitting home repair costs explains how co-owners can establish financial responsibilities for property maintenance.
The important distinction is between agreeing to share an expense and determining whether federal tax law permits a deduction.
7. What Should Co-Buyers Agree on Before Tax Season?
Many disagreements about the mortgage interest deduction for co-owners can be reduced through careful financial planning and accurate recordkeeping.
If two people are preparing to purchase property together, they should establish how expenses will be paid and documented.
Agree on Mortgage Contributions
Determine how much each person will contribute toward the mortgage.
The arrangement might be equal.
It could also reflect another agreed financial allocation.
The important thing is to document those contributions clearly.
Establish a Shared Recordkeeping Process
If the mortgage is paid from a joint bank account, maintain records showing who contributes funds.
Consider retaining monthly statements and a simple contribution ledger.
This becomes particularly useful when contributions change throughout the year.
For example, one person may temporarily cover additional expenses after the other experiences financial difficulties.
Separate Ownership and Household Expenses
Keep records distinguishing mortgage interest, principal, property taxes, insurance, maintenance, and personal household expenses.
These categories may have different legal and tax treatment.
Discuss Unequal Contributions
Suppose Maya pays an additional $4,000 toward shared property expenses during a period when Jordan cannot contribute.
Is the money a temporary advance?
Will Jordan reimburse her?
Is it an additional contribution that will be considered during a future buyout?
Or have they agreed to permanently change their expense-sharing arrangement?
The answer should be documented.
Tax consequences and legal ownership consequences should also be evaluated separately.
Maintain Accurate Records
Relevant documents may include the mortgage statement, Form 1098, property tax records, bank statements, joint-account contribution records, closing documents, and written ownership agreement.
These documents can help establish what was paid and by whom.
Coordinate Tax Reporting
Before filing, both co-owners should review the allocation of shared expenses.
This is especially important when one person receives Form 1098.
A consistent and accurate record helps reduce the risk that both people report the same expense.
Use a Written Co-Ownership Agreement
A co-ownership agreement can document financial contributions, payment responsibilities, ownership percentages, and procedures for handling disagreements.
For example, it can establish how the partners will maintain records and reconcile shared expenses.
However, a private agreement cannot override federal tax law or create a deduction that someone is not legally eligible to claim.
The owners should coordinate their agreement with a qualified real estate attorney and obtain tax advice when necessary.
What Are the Benefits of Understanding Co-Owner Tax Deductions?
Understanding the tax implications of co-buying can help buyers make more informed financial decisions.
Better Financial Planning
Co-buyers can estimate their housing expenses without assuming that every mortgage-related payment will provide a tax benefit.
More Accurate Records
Tracking individual contributions makes it easier to determine which expenses each owner paid.
Fewer Financial Disagreements
Clear expectations can reduce confusion about who contributed what and how shared expenses should be handled.
Better Professional Guidance
Accurate records help lenders, accountants, and real estate attorneys understand the ownership arrangement.
More Realistic Affordability Decisions
Understanding the difference between mortgage payments and potential tax deductions can prevent buyers from overestimating the financial benefits of homeownership.
These advantages are particularly important when people with different incomes, financial obligations, or ownership percentages purchase together.
What Are the Risks of Mishandling Mortgage Interest Deductions?
Several issues can create unnecessary complications.
Double-counting interest: Both co-owners may mistakenly claim the full amount shown on Form 1098.
Incorrect payment allocations: One owner may claim an amount that doesn’t reflect their actual qualifying contributions.
Missing documentation: The owners may struggle to establish how mortgage payments were funded.
Confusing ownership with deductions: Someone may assume their ownership percentage automatically determines the tax deduction.
Overestimating tax benefits: Co-buyers may expect substantial savings even when the standard deduction is more advantageous.
Misunderstanding special circumstances: Rental use, business use, mixed ownership structures, or unusually large mortgages may require additional calculations.
These complications don’t mean shared homeownership is inherently difficult.
They highlight the importance of accurate records and appropriate professional advice.
What This Means for Co-Buyers
The mortgage interest deduction for co-owners is about more than tax preparation.
It’s another reason financial transparency matters when people purchase property together.
Two friends might agree to split their mortgage equally.
But their tax circumstances may differ.
One may benefit from itemizing deductions.
The other may benefit more from the standard deduction.
One may contribute additional money toward property taxes or maintenance.
The other may cover different household expenses.
These differences don’t automatically make the partnership unfair.
However, both people should understand what they’re paying and how their financial arrangements work.
Ownership Percentages and Tax Deductions Are Different
Your legal ownership interest does not automatically determine the amount of mortgage interest you can deduct.
The applicable tax rules and qualifying payments matter.
Shared Expenses Need Accurate Records
If multiple people fund the same mortgage, keep records showing how those contributions were made.
This is particularly important when payments pass through one person’s account.
Tax Benefits Shouldn’t Determine Your Entire Co-Buying Decision
Potential tax deductions are one consideration.
They shouldn’t replace a realistic assessment of affordability, mortgage liability, maintenance costs, and long-term ownership responsibilities.
Your Agreement Should Reflect Real Financial Responsibilities
Before purchasing, both owners should understand how contributions, expenses, reimbursements, decision-making, and exit arrangements will work.
A strong co-buying plan should provide clarity throughout the ownership relationship, not only during the initial purchase.
The goal is to make sure both people understand the financial partnership they’re entering and have the records and agreements needed to manage it responsibly.
Frequently Asked Questions
1. Can Two Unmarried Co-Owners Both Deduct Mortgage Interest?
Yes. Eligible unmarried co-owners can generally deduct their respective shares of qualifying mortgage interest when they meet the applicable requirements. Each person must itemize deductions on their own federal return to claim mortgage interest as an itemized deduction. The amounts reported should reflect qualifying payments and should not improperly duplicate the same expense.
2. What Happens if Only One Co-Owner Receives Form 1098?
Receiving Form 1098 does not automatically give one co-owner the entire mortgage interest deduction. Under the IRS’s published Schedule A instructions, eligible borrowers can report their respective shares of qualifying interest even when the statement is issued to only one person. The person who did not receive Form 1098 must follow the appropriate reporting and identification requirements.
3. Can One Co-Owner Claim All the Mortgage Interest?
Potentially, but only when that person meets the applicable requirements and the claimed amount accurately reflects their qualifying interest payments. Co-owners cannot simply assign the entire deduction to one person for convenience or because that person expects a larger tax benefit.
4. Does a 50/50 Ownership Split Mean Mortgage Interest Must Be Deducted 50/50?
Not automatically. Ownership percentages and qualifying interest payments are separate considerations. If eligible co-owners contribute equally toward mortgage interest, an equal allocation may be appropriate. Unequal payments may produce a different allocation, subject to the facts, supporting records, and applicable tax rules.
5. Can Co-Owners Deduct Property Taxes Separately?
Potentially. Eligible co-owners may deduct their respective qualifying property tax payments when they itemize deductions. Property taxes are subject to the federal state and local tax deduction rules, including the applicable 2026 limits. The amount each person can claim depends on their circumstances and actual qualifying payments.
6. Is Mortgage Interest Deductible if You Take the Standard Deduction?
Not as an additional itemized deduction. Taxpayers generally choose between the standard deduction and itemizing eligible deductions on Schedule A. If the standard deduction is more advantageous, qualifying mortgage interest may not create an additional federal tax benefit.
7. Does a Co-Ownership Agreement Determine Who Claims the Tax Deduction?
No. A co-ownership agreement can establish financial contributions, payment responsibilities, and recordkeeping procedures. However, federal tax law determines whether a particular expense is deductible. The agreement cannot independently create a tax deduction or authorize an inaccurate allocation.
Protect Your Co-Ownership Agreement Before You Buy
Buying a home with someone is a significant financial commitment.
You may share the down payment, mortgage, property taxes, and responsibilities that come with maintaining the property.
But sharing those expenses doesn’t automatically mean every financial or tax decision will be straightforward.
Who contributes what?
How will payments be documented?
What happens when one person pays more?
How will you handle changing financial circumstances?
And what happens if one of you eventually wants to leave the partnership?
These are questions worth answering before closing.
The Pairgap Real Estate Prenup helps co-buyers work through decisions about ownership percentages, financial contributions, shared expenses, decision-making, and exit strategies.
It provides a structured way to document the responsibilities and expectations that will shape your ownership relationship.
Your final agreement should be reviewed by a qualified real estate attorney, and tax-specific provisions should be evaluated by an appropriate tax professional.
Protect Your Shared Homeownership Plan With Pairgap’s Real Estate Prenup
