Federal and State Taxes

[irvineboy]

What is the name of your state (only U.S. law)? CA

If one claims property taxes and mortgage interest from their properties (sole owner) as head of household (HoH) every year for taxes, what happens if property ownership is changed from sole ownership to Joint Tenancy with rights of Survivorship (JTWROS). Does that now mean this person can only claim 50% of what they originally claimed because someone else owns the property and would claim the other 50% of property taxes and mortgage interest?

 

[FlyingRon]

Filing status doesn't have anything to do with this at all.

So the question is really how do multiple owners allocate the income and deductions from the property to their respective taxes. The answer is the IRS doesn't care as long as all of it is accounted for. They can split it by their respective ownership interest or by any ratio they want as long as it adds up to 100%.

However, this is yet another fragmentary thread you've created. There are definite pitfalls to JTWOS as estate planning. You do understand that if you change the ownership from sole to JTWOS, you're giving away half the property to the other person without recourse? The joint tenancy can be broken arbitrarily by either party at any time.

 

[irvineboy]

Filing status doesn't have anything to do with this at all.

So the question is really how do multiple owners allocate the income and deductions from the property to their respective taxes. The answer is the IRS doesn't care as long as all of it is accounted for. They can split it by their respective ownership interest or by any ratio they want as long as it adds up to 100%.

However, this is yet another fragmentary thread you've created. There are definite pitfalls to JTWOS as estate planning. You do understand that if you change the ownership from sole to JTWOS, you're giving away half the property to the other person without recourse? The joint tenancy can be broken arbitrarily by either party at any time.

Explain what you mean by without recourse. If both are on the joint tenancy, but one is still able to account for income and deductions (or both can) that's still an option. Not saying it's ideal but didn't know that was an option when ownership is split.

 

[FlyingRon]

Without recourse means that you can't do anything to take it back from them for whatever reason. By the way, if the property is financed and the new joint owner is not a spouse or child, you can end up triggering a due-on-sale clause by this transfer.

Again, unless there is some actual reason (such as marriage or both parties actually purchasing the property together), there are a slew of reasons why you don't want to do this.

You've not explained why you think giving away half the property while you are alive is a good idea?

 

[irvineboy]

I don't know why it is a good idea. I believe he is looking at ways to make sure his partner is taken care of in case there is an accident. He thought he needed a trust to dictate where the properties go after his passing but he was advised to look into alternative methods like changing sole --> JTWROS as an alternative to doing a trust. There are online trusts that cost under $100 which look relatively easy to accomplish his goals. But changing ownership method is an easy option. I'm not saying its the best method but it is an option.