How to File Taxes If You Bought a House With Someone

If you bought a house with someone who isn’t your spouse, each of you files your own tax return and deducts only the mortgage interest and property taxes you personally paid, and only if your name is on the mortgage note. The deed percentages don’t control the annual deductions. What controls them is who wrote the checks and who is legally liable for the loan. Knowing how to file taxes if you bought a house with someone comes down to that rule, plus a handful of paperwork moves that keep the IRS from flagging the mismatch between your return and the single Form 1098 the lender issued.

The Rule That Governs Everything: Pay It and Owe It

The IRS lets you deduct mortgage interest and property taxes you actually paid during the year.¹ If you own half the home but paid 70% of the mortgage, your deduction is based on the 70%. If you paid nothing in a given year, you deduct nothing, no matter what the deed says.

There is a second requirement people miss: you also have to be legally liable for the debt. Your name must appear on the mortgage note itself, not just the deed.¹ A co-owner who is on the deed but not on the loan cannot deduct mortgage interest even if they hand their co-owner cash every month to cover half the payment. Both conditions have to be met: liability on the note and actual payment from your own funds. This single rule costs co-borrowers thousands in lost deductions when they get it wrong.

Should You Even Itemize?

These deductions only help if you itemize, and itemizing only helps if your total itemized deductions beat the standard deduction. For the 2026 tax year, the standard deduction is $16,100 for single filers and $24,150 for heads of household.²

Each co-owner decides independently. One of you can itemize while the other takes the standard deduction. There is no rule that you must match. Add up your share of the mortgage interest, your share of the property taxes, and any other itemized items like charitable contributions. If that number is below the standard deduction for your filing status, take the standard deduction and skip Schedule A entirely.

Splitting the Mortgage Interest Deduction

Each co-borrower deducts only their share of the interest actually paid. If the loan generated $18,000 of interest for the year and you split payments 60/40, one of you deducts $10,800 and the other deducts $7,200.¹

For mortgages taken out after December 15, 2017, interest is deductible on up to $750,000 of acquisition debt. Because unmarried co-owners file separately, each person applies that cap to their own return rather than sharing a single limit the way married couples filing jointly do.¹ For most co-owned homes this doesn’t come into play, but it can matter on a high-value property.

If you paid discount points at closing, those are generally deductible as mortgage interest in the year of purchase. Co-borrowers each deduct the portion of points they personally funded. Keep the closing disclosure that shows who paid what.

Handling the One-Name Form 1098

The lender issues a single Form 1098, usually under the Social Security number of the first borrower listed on the note. The IRS gets a copy. When your return claims less interest than the full amount on that form, or when a return claims interest with no matching 1098 at all, the system notices. Here is how to file around that.

If your name is on Form 1098: Report only your share of the interest on Schedule A, Line 8a. Don’t enter the full amount and then subtract your co-owner’s share; just enter what you paid. Tell your co-borrower what their share is so they can report it on their return.¹

If your name is not on Form 1098: Report your share on Schedule A, Line 8b, which is the line for interest not reported to you on a 1098. Attach a statement giving the name and address of the co-owner who received the 1098, the total interest shown on it, and the amount you paid and are claiming.³ Write “See attached” next to Line 8b. That statement is what keeps an IRS notice from showing up asking why the numbers don’t line up.

Splitting the Property Tax Deduction

Property taxes work the same way. Each co-owner deducts the real estate taxes they personally paid, on Schedule A, Line 5b.⁴ If one of you writes the full check to the county, that person claims the whole deduction. There is no equivalent of the Form 1098 reconciliation to worry about here, because lenders don’t split property tax reporting by borrower.

If your mortgage payment includes property taxes through escrow, you deduct only the amount the lender actually sent to the taxing authority during the year, not what you paid into escrow.⁵ The annual escrow statement shows the disbursed amount.

The state and local tax (SALT) deduction cap limits the combined total of state and local income taxes (or sales taxes) plus property taxes you can deduct. For 2026, the cap is roughly $40,400 for most filers, half that for married filing separately. It phases down for taxpayers with modified adjusted gross income above about $505,000 but cannot drop below $10,000.⁶ Each co-owner applies the cap on their own return, so the limit is per filer rather than per property.

When Unequal Contributions Create a Gift Tax Issue

If one of you contributed more than your ownership share to the purchase, you may have made a reportable gift. Put down $100,000 on a home titled 50/50 while your co-owner puts down nothing, and you have transferred $50,000 of value. The IRS treats that as a gift from you to them.

For 2026, the annual gift exclusion is $19,000 per recipient. Anything above that doesn’t necessarily mean tax is owed, but the excess has to be reported on Form 709 and counts against your lifetime gift and estate tax exemption, which is $15,000,000 for 2026.⁷ Few co-owners will actually owe gift tax, but the Form 709 filing requirement surprises people.

The clean way to avoid this is to match the deed to the money. If one person contributed 70% of the down payment, hold title as tenants in common with a 70/30 split. Each person received value proportional to what they paid, and there is no gift.

What Happens When You Sell

Each co-owner reports their share of the sale on their own return. Proceeds are divided by the ownership percentages on the deed, not by who paid more into the mortgage over the years. A tenant in common with a 60% interest reports 60% of the gross sale price.

Your individual tax basis starts with your share of the original purchase price and your share of closing costs like title insurance, recording fees, and transfer taxes. Add the cost of capital improvements you personally funded: a new roof, a kitchen remodel, an added bathroom, central air, a new deck. Routine maintenance such as painting or fixing leaks does not count.⁸ When both of you chip in on an improvement, each adds the share they paid to their own basis. Save receipts and note who paid.

Each co-owner can exclude up to $250,000 of gain from the sale of a primary residence, so two unmarried co-owners can shelter up to $500,000 combined. Each person has to independently pass two tests: they must have owned the home and used it as their principal residence for at least two of the five years before the sale.⁹ If one of you moved out early and fails the use test, that person owes capital gains tax on their share while the other can still claim the full exclusion. Partial exclusions are available when an early sale was driven by a change in employment, a health condition, or certain unforeseen circumstances.⁸

Report the sale on Form 8949, entering your share of the proceeds and your individual basis. The gain or loss carries to Schedule D.¹⁰ If a Form 1099-S arrives at closing showing the full sale price, you report what the form shows and adjust the basis and gain columns to reflect only your share.

What to Keep in Your Files

When your deduction doesn’t match the single Form 1098 the IRS has on file, documentation is what saves you. Hold these records for at least three years after you file, and longer for anything that affects your basis for a future sale:

A copy of Form 1098, in both co-owners’ files, even though only one name is on it.
Bank statements, canceled checks, or electronic transfer records showing each person’s actual contributions to mortgage payments, property taxes, and insurance.
The closing disclosure, which shows each person’s share of the purchase price, closing costs, and any points.
Contractor invoices and proof of payment for capital improvements, with a note of which co-owner paid.
A copy of the recorded deed showing how title is held and in what percentages.

If the two of you share one account for housing expenses, keep a record of each person’s deposits into it. A joint account with no deposit trail makes it almost impossible to show who paid what. Paying from separate accounts is the cleanest approach even if it takes a little more coordination each month.

1
Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
3
Internal Revenue Service. Instructions for Schedule A (Form 1040) (2025)
4
Internal Revenue Service. Instructions for Schedule A (Form 1040)
5
Internal Revenue Service. Publication 530, Tax Information for Homeowners
6
Internal Revenue Service. Topic No. 503, Deductible Taxes
7
Internal Revenue Service. What’s New — Estate and Gift Tax
8
Internal Revenue Service. Publication 523, Selling Your Home
9
Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
10
Internal Revenue Service. Instructions for Form 8949 (2025)