Published by REALTOR.com | August 15, 2025
As more and more people decide to enter co-ownership, the benefits need to be weighed against the drawbacks—for example, taxes.
With home prices and interest rates still high, more people are buying property with friends, siblings, or parents to get a foot on the property ladder.
It’s a smart way to share costs, but come tax season, figuring out who gets the deductions can be less straightforward.
From mortgage interest to property taxes, how you claim those breaks depends on how you own the home, who’s paying for what, and whether you have the documentation to back it up.
How co-ownership affects your tax deductions
The way your ownership is structured matters. In joint tenancy, each co-owner typically has an equal share in the property, while tenants in common can have unequal shares spelled out in the deed. For tax purposes, though, the IRS generally cares more about who actually paid the expenses than about the legal ownership split.
If both names are on the mortgage, you can each deduct the portion of interest you actually paid—whether that’s 50/50 or another split you agree on and can prove. If only one co-owner is on the mortgage but the other helps make payments, the person not on the loan can still deduct their share of interest, but they’ll need clear records showing those payments were made directly to the lender or reimbursed to the borrower.
Property taxes work the same way: You deduct what you personally paid—not necessarily half by default. The SALT (state and local tax) deduction cap—currently $10,000—can make a big difference for co-owners in high-tax states. If you’re both hitting that cap from other deductions, you might not get the full benefit from splitting property tax payments.
Keeping receipts, bank records, and even a written agreement on how costs are split will make your life much easier if the IRS ever asks questions.
Dividing mortgage interest and property tax deductions fairly
The fairest approach is to base deductions on actual contributions. Say two friends buy a $600,000 home together and share the mortgage equally. If they each pay $15,000 in mortgage interest and $5,000 in property taxes during the year, they can each claim those amounts on their returns.
But if one friend pays 70% of the mortgage and taxes while the other pays 30%, their deductions should reflect that—even if they own the property 50/50 on paper. The IRS allows this, as long as you can document the payments.
Tax filing
Your lender issues Form 1098 each year, showing the total mortgage interest paid. If you and your co-owner both paid, but the form lists only one of you, you have options.
You can use the form as is and have the listed person deduct only the portion they paid, with the other person deducting their share separately using supporting records.
Or, you can request a corrected Form 1098 from your lender, showing each person’s share. Not all lenders will do this, but it’s worth asking.