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Claiming mortgage interest paid on Forest Land

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rosebudlily

New member
What is the name of your state: WASHINGTON

Hello,

A couple of questions. We are buying land (Forested Land) that we intend to build on. We have no other property or home so this is our main place of residence. Will we be able to claim all interest paid on our taxes even if it is considered forested land at this point?

Secondly, my husband and I live in a 50/50 state (WA). I'm the wage earner and my husband only is on the property title.

Will we be able to claim the mortgage interest paid on our taxes even if my husband has his name only on the property but does not earn an income?
 


Taxing Matters

Overtaxed Member
I'm not sure what you mean. Washington is a "community property" state. That doesn't mean "50/50", it means "100/100"
No, it doesn't mean 100/100. Community property means that generally each spouse has a half interest in the community property and community income, regardless of which spouse's name is on the title or which spouse actually earned the income.
 

Taxing Matters

Overtaxed Member
What is the name of your state: WASHINGTON

Hello,

A couple of questions. We are buying land (Forested Land) that we intend to build on. We have no other property or home so this is our main place of residence. Will we be able to claim all interest paid on our taxes even if it is considered forested land at this point?


In order to claim the home mortgage interest deduction for the property you must have a home on the property. As davew9128 properly points out, you cannot take that deduction for unimproved land. See IRS publication 936 on page 3 where it describes a qualified home. Note that a RV or camper that you park on the land might itself be a qualified home if it is you main residence and meets the requirements of a qualified home but since it is not permanently attached to the land you would only get to deduct interest you paid on the RV or camper itself but would not be able to deduct the interest paid on the land.


Secondly, my husband and I live in a 50/50 state (WA). I'm the wage earner and my husband only is on the property title.

Will we be able to claim the mortgage interest paid on our taxes even if my husband has his name only on the property but does not earn an income?
Once you have a home built on the land, you may take the home mortgage interest deductions, subject to the limitations mentioned in the publication. It won't matter that your husband is the only one on the title to the property so long as you file a joint income tax return.
 

Zigner

Senior Member, Non-Attorney
My understanding is that, while married, each spouse has 100% ownership of the item in question.
 

FlyingRon

Senior Member
Nope, they have an undivided interest, which means they are free to enjoy the entire property, but their equitable ownership is half. As TM points out a community property state just indicates that all property acquired during marriage has such an undivided interest.
 

Taxing Matters

Overtaxed Member
My understanding is that, while married, each spouse has 100% ownership of the item in question.
That's not quite right. They each have a 50% undivided interest in the property. "Under Washington law, she has a present undivided one-half interest in and to the community property (E.g., In re Heringer's Estate, 38 Wash.2d 399, 203 P.2d 297 (1951))." Potlatch No. 1 Fed. Credit Union v. Kennedy, 76 Wash. 2d 806, 812–13, 459 P.2d 32, 36–37 (1969).

However each spouse has the power (with some exceptions) to "manage and control community property, with a like power of disposition as the acting spouse or domestic partner has over his or her separate property." RCW § 26.16.030.
 

Zigner

Senior Member, Non-Attorney
Nope, they have an undivided interest, which means they are free to enjoy the entire property, but their equitable ownership is half. As TM points out a community property state just indicates that all property acquired during marriage has such an undivided interest.
Fair enough...
 

Zigner

Senior Member, Non-Attorney
That's not quite right. They each have a 50% undivided interest in the property. "Under Washington law, she has a present undivided one-half interest in and to the community property (E.g., In re Heringer's Estate, 38 Wash.2d 399, 203 P.2d 297 (1951))." Potlatch No. 1 Fed. Credit Union v. Kennedy, 76 Wash. 2d 806, 812–13, 459 P.2d 32, 36–37 (1969).

However each spouse has the power (with some exceptions) to "manage and control community property, with a like power of disposition as the acting spouse or domestic partner has over his or her separate property." RCW § 26.16.030.
Thank you for the edification.
 
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