The US Tax Code allows homeowners the opportunity to claim deductions based on the interest paid on a home mortgage. Deductions are also available related to the taxes a homeowner pays on their property. In the case of a cosigner being used to secure a mortgage, there are methods available in the tax code that allows the cosigner to take advantage of the tax benefits interest payments. One key to claiming legal tax benefits for interest by a cosigner is the requirement that the total interest will need to be divided among all who claim the interest payment. The total percentage of interest paid cannot exceed 100% of the amount of interest paid in a given year. Here is how you -- a cosigner -- can claim the deduction for interest paid on a home mortgage.
First, review IRS Form 1098 to determine the amount of interest paid during the year. The form is made available by your mortgage lender. Next, review your property assessment report to find the amount of property tax burden due.
Filing must be done in strict coordination with all parties who are signed on the mortgage. Consult with everyone legally able to claim the deductions to determine who will be using the deductions and to coordinate the amounts of the deduction claims so as to not claim more than 100% of the interest paid collectively.
Use IRS Form 1040 and form 1040 Schedule A for itemized deductions including the deductions for tax and interest payments on the home for which you cosigned. Input the value of property taxes listed on the assessment report on line 8 of form 1040 Schedule A. Input the amount of interest paid found on the form 1098 on line 11 of form 1040 Schedule A. (Forms 1040 and 1040 Schedule A are available by mail from the Internal Revenue Service, able to be downloaded and printed from the IRS website at www.irs.gov, and elsewhere.)
Find the sum of your combined itemized deductions and enter the sum on line 40 of Form 1040. Complete Form 1040 to include all other claims and reports of income and any other applicable payments. Sign and date the form and submit your return to the IRS no later than April 15th.