Solved

If I am added to the deed of a house my parents own (I live in it and pay the mortgage for them) can I claim the mortgage deduction? I am not on the mortgage note.

Forum|Forum|6 years ago
June 1, 2019
2 replies
0 views

My parents purchased this house three years ago for an investment. I moved in at that time and have been paying the property taxes and mortgage. Now that I am earning more, I could benefit from the deduction. My parents are supportive of this. I could purchase it; we could refinance and add my name to the note. BUT couldn't we save costs by simply adding me to the deed and let me claim the deduction? If so, if I am added this November, can I claim the deduction for the entire year since I have been paying it and they will not claim the deduction?

TurboTax Self Employed Online

Best answer by Bees

Forbes disagrees and quotes treas reg 1.163-1(b)
2. Who is listed as the borrower on the mortgage? In general, a taxpayer can only deduct interest on debt for which he is legally obligation. He cannot deduct interest he pays on a debt that isn’t his.

3. Who has legal title to the house? Treas. Reg. §1.163-1(b) provides an exception to the general rule found in #2. Pursuant to the regulations, even if you’re not directly liable on the mortgage, you can deduct any interest you pay on the debt as long as you are the legal owner of the house (e.g., a deed holder).
http://www.forbes.com/sites/anthonynitti/2014/12/30/five-traps-to-avoid-when-deducting-mortgage-interest/#6d5f35ff5741

B

BeesAnswer

Forbes disagrees and quotes treas reg 1.163-1(b)
2. Who is listed as the borrower on the mortgage? In general, a taxpayer can only deduct interest on debt for which he is legally obligation. He cannot deduct interest he pays on a debt that isn’t his.

3. Who has legal title to the house? Treas. Reg. §1.163-1(b) provides an exception to the general rule found in #2. Pursuant to the regulations, even if you’re not directly liable on the mortgage, you can deduct any interest you pay on the debt as long as you are the legal owner of the house (e.g., a deed holder).
http://www.forbes.com/sites/anthonynitti/2014/12/30/five-traps-to-avoid-when-deducting-mortgage-interest/#6d5f35ff5741

Disclaimer: Not a tax professional. Information gathered from internet links. Anything dated in June 2019 was posted in prior years and is before the 2019 limits and changes.

T

TaxGuyBill

I agree. If you are on the deed but on on the mortgage, you CAN still deduct the mortgage interest that you pay.

"Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness."
<a rel="nofollow" target="_blank" href="https://www.law.cornell.edu/cfr/text/26/1.163-1">https://www.law.cornell.edu/cfr/text/26/1.163-1</a>

Carl11_2

To claim the mortgage interest deduction, you must be legally obligated to pay it. So if your name is NOT on the loan, you have no legal obligation to pay it. Therefore you can not claim it.

To claim the property tax deduction, you must be legally obligated to pay it. If your name *IS* on the deed, then you are legally obligated to pay it and can therefore claim it.