Who Claims Mortgage Interest When Filing Married Filing Separately?

When filing Married Filing Separately (TY2025), you generally deduct only the mortgage interest you actually paid; community property states usually require a 50/50 split on community funds. Itemize on Schedule A and keep records. See IRS Pub. 936 and Pub. 555. Reviewed for TY2025.

H2: Introduction: How Mortgage Interest Works When Filing Separately

The mortgage interest deduction is one of the most valuable itemized deductions available to homeowners. But when you file married filing separately, the rules for who can claim home mortgage interest become more complicated — especially if only one spouse is on the loan, you pay from a joint checking account, or you live in one of the nine community property states.

And yes, we know this topic feels about as fun as prepaid interest calculations — but we’re here to make things simple, clear, and maybe even a little bit entertaining.

👉 Talk with a tax expert today if you want help applying these rules to your tax return.

H2: What Counts as “Home Mortgage Interest”?

IRS Publication 936 defines home mortgage interest as interest paid on a secured loan used to buy, build, or improve a qualified home. This includes:

• Interest on a primary residence
• Interest on a second home
• Deductible points
• Certain prepaid interest
• Interest on qualifying home acquisition debt

To claim this deduction:

• You must itemize deductions
• The loan must be secured by the home
• You must have an ownership interest
• You must have actually paid the mortgage interest

H2: Mortgage Interest Deduction Limit Under MFS

For Tax Year 2025, the acquisition-debt limit that applies for married filing separately is $375,000 (generally half of the $750,000 limit that applies to married filing jointly). Note that limits apply to the date the debt was incurred and may vary for older mortgages (grandfathered debt).

Source: IRS Pub. 936

Who Can Deduct Mortgage Interest When Filing Separately?

You can deduct the interest you actually paid, and only your share.

Your ability to deduct home mortgage interest depends on:

1. Who is legally liable for the mortgage loan
2. Who actually made the mortgage payments
3. Whether you live in a community property state
4. Whether you itemize deductions (you must)
5. Whether the debt qualifies as acquisition debt
6. How ownership interest is titled

Let’s break down every major scenario.

Scenario 1: Both Spouses Are on the Mortgage

If both spouses are legally liable for the mortgage:

Common-law states:

• Deduct only the mortgage interest you paid
• Split based on actual payments
• If one spouse paid 100% from a separate account, they may deduct all mortgage interest paid
• If paid equally, each claims 50%

Example

Total mortgage interest paid: $12,000

• Spouse A deducts $6,000
• Spouse B deducts $6,000

What if one spouse paid everything?

If one spouse made all the mortgage payments from their own account:

• That spouse may claim all deductible interest
• The other spouse claims zero interest expense

Yes. Even under MFS, the IRS still cares about actual payment responsibility.

Scenario 2: One Spouse on the Mortgage

If only one spouse is legally liable on the mortgage, that spouse is generally the one eligible to deduct the interest. Payments by the non-liable spouse are often treated as gifts to the liable spouse; however, if the non-liable spouse made the payments and can prove it, they may still be able to claim the deduction (facts and circumstances matter).

When Form 1098 is in the other spouse’s name, attach a statement that documents payment and allocation.

Source: IRS Pub. 936, How to Report

Scenario 3: Community Property States — The Rules Change

In community property states, the rules change. Under IRS Publication 555:

In community property states, amounts paid with community funds are generally treated as community income or community obligations. That commonly results in a 50/50 allocation of mortgage interest paid from community funds, but state law and specific facts can affect allocation.

The nine community property states are:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

States that have optional community property laws:

• Alaska
• Tennessee
• Florida
• South Dakota
• Kentucky

Complete Form 8958 when required. Also, confirm your state’s community property rules because state law can change how community income is characterized.

The Big Rule

If mortgage payments were made with community funds, each spouse:

• Reports half of the home mortgage interest deduction
• Even if only one spouse paid the mortgage
• Even if only one spouse earned the income
• Even if only one spouse is on the mortgage loan

Yes. Community property rules override typical MFS logic.

Example – Community Funds

Mortgage interest paid: $10,000

• Each spouse deducts $5,000

Example – Separate Property

If one spouse uses separate funds to pay mortgage interest on separate property:

• That spouse can deduct the interest they paid
• No 50/50 split required

For the full explanation, see our guide on Community Property Rules for Married Filing Separately.

Form 8958

In community property states, each spouse must report income and deductions on separate returns using:

Form 8958 – Allocation of Tax Amounts Between Certain Individuals

What If the Form 1098 Is Only in One Spouse’s Name?

Form 1098 showing the lender’s reporting name does not automatically control who may deduct the interest. If you made the payments, document them (bank records, canceled checks) and attach a statement to your return explaining the allocation and why you are claiming the deduction. The IRS may request supporting documentation.

You can still deduct mortgage interest if:

• You helped make the payments
• You are liable for the loan
• You own the home
• You live in a community property state and must split interest evenly

Because the 1098 won’t match your return, attach a short statement showing:

• How much interest you paid
• How you split the mortgage interest
• Who is on the loan
• Whether community property rules apply

Source: IRS Pub. 936, How to Report

Example Scenarios (MFS Mortgage Interest)

Example 1 — Joint Account, Common-Law State

Interest paid: $9,000 from a joint checking account

• Spouse A: $4,500
• Spouse B: $4,500

Example 2 — One Spouse Uses Their Own Account

Interest paid: $12,000 from Spouse A’s separate account

• Spouse A deducts $12,000
• Spouse B deducts $0

Example 3 — Community Property State (Split Required)

Interest paid: $8,000 from a community joint account.

• Spouse A: $4,000
• Spouse B: $4,000

Example 4 — Separate Property + Separate Funds

Spouse B owns the home as separate property and pays from a separate account.

• Spouse B deducts 100%
• Spouse A deducts 0%

Property Taxes vs. Mortgage Interest

Property taxes and mortgage interest are often lumped together, but the IRS treats them as two separate itemized deductions. Mortgage interest depends on who paid the interest and who is liable for the mortgage loan, while property taxes follow a different set of rules tied to ownership interest and payment responsibility. If you’re in a community property state, then you face mandatory 50/50 allocations.

If you also need help figuring out who claims property taxes when filing separately, see our dedicated guide: Who Claims Property Taxes When Filing Married Filing Separately?

How Filing Separately Affects Other Tax Deductions

Filing MFS limits several major tax benefits, including:

• Earned Income Tax Credit
• Adoption tax credit
• Child Tax Credit (limited)
• Dependent Care Credit (generally disallowed)
• Student loan interest deduction
• Much reduced or no deduction for IRA contributions

This page is specifically about mortgage interest, but these rules also affect your filing status and total taxable income, which in turn influences whether itemizing deductions saves money.

For a full list of MFS penalties, see: MFS Penalties & Credits You Lose.

You can also check out the Married Filing Separately Guide for more information.

How to Deduct Mortgage Interest When Filing Separate Returns

Step 1 — Determine your filing status

Confirm that you will file married filing separately, not married filing jointly.

Step 2 — Verify liability

Review the mortgage loan documents to determine who is legally responsible for the secured debt.

Step 3 — Identify who actually paid the mortgage payments

Use bank statements, joint account records, and payment logs.

Step 4 — Determine whether you live in a community property state

This affects whether you must split the interest equally.

Step 5 — Itemize deductions

On Form 1040 Schedule A, you will:

• Itemize deductions
• Deduct mortgage interest
• Deduct points (if allowed)
• Deduct property taxes and local taxes (if itemizing)
• Report only your share of interest paid

Remember: If one spouse itemizes, both spouses must itemize.

Step 6 — Fill out Form 8958 (if required)

Community property states require you to allocate:

• Interest expense
• Mortgage payments
• Combined income
• Certain expenses

Step 7 — Keep documentation

Especially important if only one spouse paid or if allocations differ from the Form 1098.

Final Thoughts

Filing separately complicates the home mortgage interest deduction, but it is still claimable if you know who paid, who is liable, and whether community property rules apply. With good documentation, you can correctly report your share and avoid IRS issues.

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