I am married with one child (2 Years old) and we have a "marital home" in my wife's name that we just bought three years ago on a 30 year mortgage. We also have a second house that I bought in 2009 before I met my wife, so this house is in my name and is also on a 30 year mortgage.=====> So basically, One of the most confusing tax breaks is the mortgage interest tax deduction. When you?re eligible to deduct mortgage interest but don?t, you leave a lot of money on the table by overpaying taxes. And claiming the deduction when you?re not eligible can get you into trouble with the IRS. The interest you pay on a mortgage for your primary residence or a second home can be deducted from your income when you have secured debt on a qualified home in which you have an ownership interest and you must file your federal income taxes using Form 1040 and itemize deductions on Sch A on your joint federal return. So unless you itemize your deductions on Sch A of 1040 you can not claim mortgage interest expenses.
For the new home, as you said, you are married and file taxes jointly, but only your wife is the only one listed on your house deed and mortgage)or even not on the mortgage). When you file taxes jointly, you pool both of your income and tax deductions together on one tax return. So you get the tax break as a couple when you file a joint return and itemize deductions on Sch A.
On the old home, yes of course you can also claim the mortgage interest exp on your joint return as said above. Many spouses choose to buy homes together by obtaining a joint mortgage. It's often easier to qualify for a joint mortgage, because both spouses can contribute income and assets to the application. However, if one spouse can qualify for a mortgage based on his own income and credit, the mortgage does not need to be in both spouses' names unless you live in a community property state.
Before I met my wife, I used to live in the older house and my mother stayed with me. Once we bought the second house, I moved in with my wife and let my mother stay in the first house. I pay all her expenses (utilities, internet, yardwork etc. etc.) and also give her $500 a month for her personal expenses. I also pay the monthly installment for her car. She has no income as she does not work.My question is, can I take any tax benefits from this situation? =======>> You may claim your mother as one of your dependent on your joint return as a qualifying nonrelative as she doesn?t live with you for half theyear; To meet the support requirements necessary to claim your parent as a dependent on your tax return, you must cover more than half of your parent?s support costs ? meaning 51% or more of their support costs must be covered by you.
These costs include food, housing or lodging expenses, clothing, and medical services and/or equipment costs. To be allowed to claim your parent as a dependent, your parent?s earned income cannot be more than$4,150 for the 2016 tax year. This means that if your parent earns more than $4,150, you aren?t eligible to claim them as a dependent. Non-taxable income, such as Social Security, does not count toward this amount. you cannot claim yardowork for ht house as it is not biz proeprty.
I would like to, if possible, use mortgage interest credit on the second house... but I think it is considered an investment house, so I can't do that... is this correct?========>> The home to which the certificate relates must be your main home so unless it is your main no.Yes just an investment home not rental home you won't be able to file a Sch E for the property. Any real estate taxes will still be deductible on Sch A. If you only own one home, you can treat this as a second home and claim the mortgage interest on Sch A as well. Nothing else that might have been deductible on Sch E will be deductible for you.
Secondly, I used to be able to claim my mother as my dependent when I was single. Can I still do that as a married couple? ====>as mentioned above
By the way, she did not have health insurance until June of last year, so there is that question of penalty for not having health insurance as well.========>> she would not be penalized, the person who claims her as a dependent gets penalized for not having insurance for a dependent listed on their return.