Voss v. Commissioner, No. 12-73257 (9th Cir. 2015)
Annotate this CasePetitioners, two unmarried co-owners of real property, each claimed a home mortgage interest deduction under Internal Revenue Code section 163(h)(3). Section 163(h)(3) allows taxpayers to deduct interest on up to $1 million of home acquisition debt and $100,000 of home equity debt. The tax court agreed with the IRS that taxpayers were jointly subject to section 163(h)(3)'s $1 million and $100,000 debt limits and were therefore disallowed a substantial portion of their claimed deductions. Although the statute is silent as to unmarried co-owners, the court inferred from the statute’s treatment of married individuals filing separate returns that section 163(h)(3)’s debt limits apply to unmarried co-owners on a per-taxpayer basis. Accordingly, the court reversed the decision of the tax court and remanded for a recalculation of petitioners’ tax liability.
Court Description: Tax. The panel reversed a Tax Court decision involving the debt limit provisions for unmarried co-owners seeking to deduct mortgage interest for their qualified residence. The panel held that the debt limit provisions of 26 U.S.C. § 163(h)(3) apply on a per-taxpayer basis to unmarried co- owners of a qualified residence. The panel remanded for determination of the proper amount of interest that taxpayers are entitled to deduct. Dissenting, Judge Ikuta would defer to the Internal Revenue Service’s reasonable interpretation of an ambiguous statute, which interpretation would limit unmarried taxpayers in this situation to deducting the same amount as married taxpayers filing jointly. VOSS V. CIR 3
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