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millennial wedding 1Millennials resist traditional marriage.

When Millennials make the decision to become a couple, their wedding app may click them from great locations to  photographers, then food, and on to vows influenced by the tax code.

In a little-publicized move a few weeks ago, the IRS gave many couples something else to think about in Section 163 when it offered a potential “I Don’t” gift to unmarried couples and snatched away an “I Do” gift to married couples.

The IRS “acquiesced” in this Section 163 ruling involving interest deductions on jumbo mortgages. The IRS said, “We’re going to allow qualified unmarried co-owners to go beyond the $1.1 million mortgage cap—all the way up to $2.2 million.”

What does this mean?
  • High-income single professionals with jumbo mortgages should carefully consider the consequences of this ruling. Remaining as unmarried partners could bring significant tax benefits if both can potentially claim the $1.1 million cap, and in the right pricey neighborhoods, savings could be tens of thousands of dollars a year. There are, however, risks involved any time co-owners or buyers of expensive homes choose not to marry, but are willing to share mortgage expenses. These are contracts that could get very messy.
  • This same couple planning a wedding could find themselves limited to deductions of $1.1 million in mortgage and home debt. By benefit of marriage, though, they are generally afforded a less-risky arrangement than their unmarried counterparts.
  • This Section 163 ruling could also apply to purchases of real estate with friends and family. However, just as with an unmarried partner, there aren’t as many protections.
What’s the bottom line?

Marriage is more than a tax deduction. It’s about life and a future planned and cultivated through mutual love and respect and a shared vision. It’s more than this year’s tax code ruling; more than a supposed, life-time marriage penalty.

Taxpayers will continue to challenge the tax code. Some taxes (yes, Section 163) are “little-publicized,” and others, like the late 2015 Social Security ruling, show up so fast there’s barely time to react. Other tax proposals have contained so many pages that later we hear the excuse that “nobody could read it.”

There are no one-answer-fits-all tax questions. You are unique. Continue accordingly.

Let’s talk about Section 163.  479-478-6831 or

Millennials and Marriage            Late 2015 Tax Changes