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.