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We are looking to buy our first condo in Manhattan and want to maximize our tax advantages. We are looking in the $2M range. Is it possible for two unrelated, unmarried people to each get a mortgage for half the purchase price and each individual take a tax deduction on the interest for their individual loan? And is each individual subject to the $1M limit or is that limit on the property? (can we each borrow $1M and both take the full tax deduction?)
The $1M debt limit is per property, not per owner.
There was a recent case (which I can't find now) where two unrelated owners tried the technique you describe, and were shot down by the IRS.
Actually, it's both. An individual can't deduct interest from a second $1 million mortgage (as in on a second property or a second mortgage on one property).
Good morning chaddey,
Not sure if I'm reading correctly:
1. Do you propose that each individual get his/her own mortgage equalling half the purchase price?
2. Or do you mean that you will both be on the new mortgage equalling $1m as co-borrowers and you're putting 50% down payment?
The first scenario is not permissible under lending guidelines; the second is (under ECOA a Lender may not discriminate based on marital status).
As for tax advice, I recommend you consult with your tax professional.
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
Thanks for everyone's feedback. @tcurranmortgage; I was wondering if the first scenario was permissible.
This brings to mind a question I had, and might bring the answer to chaddey's question.
Can a condo *unit* ownership be structured as Tenancy in Common?
And can each Tenant in Common then make his own mortgage arrangements (which I believe would be permissible on a whole house, rather than condo unit)?