Reference no: EM131760578

Question: In mid-2015, Elizabeth and Fitzwilliam, successful entrepreneurs, moved in together and bought a house. Although unmarried, they are co-owners of the property and each pays one-half of the mortgage. Shortly after the purchase, the couple took out a home equity loan on the property and built a swimming pool and huge addition. They are both responsible for the home equity loan and pay their one-half share. For tax years 2015, each claimed a separate home mortgage interest deduction for their total interest payments on both loans. The mortgage on the residence is $2,000,000 and the home equity loan on the house is $200,000. They are concerned about reporting the large mortgage interest deductions on their 2016 return and have come to you for guidance. The couple files separate, individual returns.