Written by a TurboTax Expert • Reviewed by a TurboTax CPAUpdated for Tax Year 2023 • November 8, 2023 5:43 PM
OVERVIEW
There are many tax incentives for owning a home. But how do you designate a primary residence when you own more than one home? Watch this video to find out.
Video transcript:
Hello, I’m Jill from TurboTax with some interesting information for joint filers who own more than one home. It is no secret that the law provides a number of tax incentives for you and your spouse to purchase a home. However, some of these incentives are only available for the expenses that relate to your primary residence.
The IRS is very clear that taxpayers, including married couples, have only one primary residence—which the agency refers to as the “main home.” Your main home is always the residence where you ordinarily live most of the time. And even if you split your time evenly between two residences, you can’t designate both as your main home. Identifying which of the two residences is your main home is especially important when excluding some of the profit on the sale of your home from tax. This is because both the credit and exclusion are only available for your main home. When you sell your home, the IRS allows joint filers to exclude up to twice as much capital gain as a single filer.
If you cannot easily determine which residence is your main home, there are a number of factors to consider that will help you identify which one it is. Generally, the residence where you receive mail, the address listed on your tax returns and printed on your drivers’ licenses will identify which residence is your main home. In addition, each home’s proximity to your employer and your spouse’s employer, the place where your cars are registered and the place where other family members reside is also indicative of where your main home is.
There are, however, tax deductions the IRS offers that cover the expenses on up to two homes. And as long as one is your main home and you use the other for personal purposes, you can deduct the mortgage interest, home equity loan interest (through 2017 only) and mortgage insurance premium payments (through 2021 only) you pay on both. It is important to remember that identifying your main home is only one of many limitations that exist on these tax benefits. Once you determine which of your homes qualifies for a deduction or exclusion, you still may need to satisfy additional eligibility requirements before reporting them on your return.
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FAQs
Even if you have two homes you spend equal amounts of time in, you'll choose one as your primary residence for tax purposes. The IRS calls this house the “main home.” As a result, every couple must designate the main home when they file.
Can husband and wife have different residency? ›
Married couples have a right to separate residency status. One spouse can be a California resident while the other acquires or maintains residency in another state. However, this rule doesn't necessarily mean the nonresident spouse's income is free from California income tax.
How does the IRS know your primary residence? ›
But if you live in more than one home, the IRS determines your primary residence by: Where you spend the most time. Your legal address listed for tax returns, with the USPS, on your driver's license and on your voter registration card.
Can I have two primary residences in two different states? ›
Under RTC 17014(c), an individual may only claim one domicile at a time. This follows the logic that you can only be the most settled and have a permanent connection to one place.
Can husband and wife own separate homes? ›
While you and your partner can keep your assets apart, some states limit how you apply for mortgages and how your wealth is divided in the event of a divorce. Can a husband and wife buy separate homes? Yes.
Can you be married and live at different addresses? ›
Some couples live in different apartments in the same building or on opposite sides of a neighborhood. Other duos live in different cities. A lot of couples choose to live apart together intentionally and believe this setup actually improves their relationship or marriage.
Can married couples file jointly but use separate addresses? ›
The Rule on Married Couples Living Separately
Even if you are in a situation where you are still technically married but separated and live independently, you may still file a joint tax return if the marriage license is still active.
How does IRS verify residency? ›
You are a resident of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1 – December 31). Certain rules exist for determining your residency starting and ending dates.
What is the IRS rule for second homes? ›
For the IRS to consider a second home a personal residence for the tax year, you need to use the home for more than 14 days or 10% of the days that you rent it out, whichever is greater. So if you rented the house for 40 weeks (280 days), you would need to use the home for more than 28 days.
What does the IRS consider proof of residency? ›
School records (you may need to send one or more school records to show more than half the year). Medical records from doctors, hospital or medical clinic (immunization records may not include all the necessary information). Adoption or child placement documents. Court records.
While it would be wonderful if two people filing taxes meant twice the benefits and exemptions, U.S. tax laws require married couples filing jointly to claim just one primary residence every year.
How does dual residency work? ›
Dual residency in states outside of California is not exempt from multi-state taxation. This scenario also has its share of complicated tax rules. If you live in California for only part of the year, the percentage of tax you pay will be based on how many months during the year you reside there.
Can two people claim the same house on taxes? ›
Co-owners of a property are each entitled to claim a share of related tax deductions and credits on their tax returns. How those deductions and credits are divided may depend on how the property is held, who paid the expenses and what your tax filing is.
What is the IRS rule for primary residence? ›
For tax purposes, a principal residence is the dwelling that a person inhabits most of the time. It does not matter whether it is a house, apartment, trailer, or boat as long as it is where an individual, couple, or family lives most of the time.
When filing married jointly, who is the primary taxpayer? ›
The person listed first on your joint federal income tax return is sometimes called the “primary taxpayer.” But it's important to note that your tax liability remains the same whether you list your name or your partner's name first on your federal income tax return when you are married and filing jointly.
Can couples live in separate houses? ›
The term living apart together (LAT) refers to couples in an "intimate" relationship who choose to live separately for financial, personal, or other various reasons. This concept is nothing new to partners who live separately due to work obligations or military deployment.
Can spouses file as residents of different states? ›
It depends on which state you live in. Some states allow you to file a joint return with your nonresident spouse, and in others you cannot do so. In addition, in some states may prefer a separate return for each spouse for state purposes.
Can a married couple live separately? ›
As of this year, there are 3.89 million Americans who are living apart from their spouses, or approximately 2.95 percent of married Americans. (These statistics do not include separated couples considering a divorce, but do include couples with circ*mstances that force them apart, as in the case of military families.)
Can you have multiple residency? ›
Legally, you can have multiple residences in multiple states, but only one domicile.
Can I file federal jointly and state separately? ›
Generally, the filing status you use at the federal level will be the same filing status at the state level. However, each state has their own rules regarding this topic, where some states allow you to file separately despite your federal return being filed jointly. Check your state's rules to see your options.
