TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, August 1, 2016

IRS Acquiesces In Ninth Circuit Decision Giving Unmarried Couples Double The Mortgage Interest Deduction Available To Married Couples

The IRS has issued AOD 2016-02, 2016-31 IRB 193 (Aug. 1, 2016), acquiescing in the Ninth Circuit's decision in Voss v. Commissioner, 796 F.3d 1051 (9th Cir. 2015), which held that the § 163(h)(3) limitations on the deductibility of mortgage interest ($1 million of acquisition indebtedness plus $100,000 of home equity indebtedness) are applied on a per-taxpayer basis (for a total of $2.2 of mortgage debt for unmarried couples), rather than on a per-residence basis (and thus limited to $1.1 of mortgage debt for married couples), as previously argued by the IRS and decided by the Tax Court (138 T.C. 204 (2012)).

The parties in the case were celebrity psychiatrist Charles Sophy and his domestic partner, Bruce Voss, who owned homes in Beverly Hills and Rancho Mirage, California. Prior TaxProf Blog coverage:

http://taxprof.typepad.com/taxprof_blog/2016/08/irs-acquiesces-in-ninth-circuit-decision-giving-unmarried-couples-double-the-mortgage-interest-deduc.html

IRS News, New Cases, Tax | Permalink

Comments

I doubt Congress intended to create this particular marriage penalty, but the language supports the Ninth Circuit. I guess I'm old school, but the words should govern, not some mysterious intent. If we believe in the rule of law, people should be able to rely on the words. Now Congress should fix this.

Posted by: Mike Petrik | Aug 2, 2016 11:53:56 AM

More marriage penalty

Posted by: Yo gabba gabba | Aug 2, 2016 4:27:46 PM