Facts
The Federal Supreme Court had to deal with the question of whether the taxpayer, who lives in a cohabitation relationship, can deduct debt interest from her income, even though she is not the sole owner of the residential property. The taxpayer and her cohabiting partner had concluded a mortgage contract, in which both were listed as borrowers and were jointly and severally liable. The taxpayer had paid 40% of the debt interest and claimed it in her tax return.
The Cantonal Tax Office of Aargau had not recognized the deduction of debt interest, as it was considered hidden living costs. The lower court, the Administrative Court of the Canton of Aargau, had dismissed the appeal of the Cantonal Tax Office and allowed the deduction of debt interest.
Considerations
The Federal Supreme Court examined the question of whether the taxpayer can deduct debt interest from her income. It found that the taxpayer and her cohabiting partner were jointly and severally liable and that the taxpayer had paid 40% of the debt interest. The Federal Supreme Court ruled that the taxpayer had her own debt, as she was listed as a borrower and was jointly and severally liable.
The Federal Supreme Court pointed out that the deductibility of debt interest does not depend on whether the…