Tax filter: who files property tax statement for a new-ish home?
March 20, 2024 9:59 AM   Subscribe

My partner and I bought our first home at the end of 2022. We are unmarried and file taxes separately. Who files what?

This year we received a property tax statement for our home, as well as form 1098 which is a mortgage interest statement. Can only one of us file these forms on our taxes? My partner makes about 3x as much as me. Is there a benefit to one of us filing versus the other, in terms of a larger property tax refund? We are in Minnesota. Thanks for any insight!
posted by sucre to Work & Money (6 answers total) 2 users marked this as a favorite
 
According to the IRS's instructions for form 1098, only the "payor of record" needs to report this, even if there are co-borrowers. Direct link to the section about this.
posted by zippy at 10:09 AM on March 20, 2024 [1 favorite]


First, a terminology clarification: You are trying to minimize your income taxes, which might result in an income tax refund. This may be affected by the property taxes paid, but you will not get a property tax refund.

Second, you don't need to report either mortgage interest or property tax paid, but if you itemize, you should include those in the itemized deductions.

Third, the tax savings from itemizing depends on your marginal tax rate (aka tax bracket), which is very likely higher for your higher-earning partner. Therefore, it would likely be best for you to claim the standard deduction and your partner to itemize and deduct both the mortgage interest and property tax.

This article goes into detail about your question. For mortgage interest, "Under normal circumstances, a deduction for a joint obligation is allowable to whichever of the responsible parties makes payment from his or her separate funds." And for property taxes, "In many localities, tenants in common are jointly and severally liable for property taxes. Joint and several liability means that either owner can be required to pay the full amount of the tax due. In this situation, each owner is entitled to deduct the amount of tax he or she actually paid." (Additional Minnesota-specific background here.)

I (an anonymous internet poster with no formal training in tax law) think it would be perfectly reasonable for your partner to claim the full amount of both. In future years, you might want to play it safe by making all payments from your partner's account.

You also might want to get professional, state-specific advice this year. Based on what you learn, you should then be able to file yourself in future years.
posted by Mr.Know-it-some at 10:32 AM on March 20, 2024 [3 favorites]


Response by poster: Thank you both! Just to clarify, here in MN there is a yearly property tax refund separate from income tax refunds. Renters may also receive this refund depending on their income to rent ratio.
posted by sucre at 10:37 AM on March 20, 2024


Best answer: Hi, I do taxes in Minnesota. Only one of you files the M1PR and it does not matter who. This is because you need to include both incomes as part of the Household income section.
posted by soelo at 1:00 PM on March 20, 2024 [2 favorites]


Best answer: If your total household income is over $135,410 then you don’t qualify for a property tax refund and you do t have to file the M1PR, by the way. Household income is not the same as AGI, so read through the additions and subtractions.
posted by soelo at 1:07 PM on March 20, 2024 [1 favorite]


One exception to the income cap is if you qualify for the Special refund when your taxes go up more than $100 and more than 12 percent in a single year. There is no income cap on that refund, so you can file for it. It probably won't be much, of course.
posted by soelo at 7:28 PM on March 20, 2024


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