Question

Can my father, who took out an LMA loan for me to purchase a home claim the interest?

Forum|Forum|7 years ago
June 5, 2019
3 replies
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My father took out an LMA loan for me to purchase a home. It is not his residency, it is mine. The loan is under his name. My name is on deed, I have paid the interest on this loan. Will he be able to claim the interest or can I claim it?

S

SweetieJean

Employee

Do you mean a Loan Management Account that is a secured line of credit that uses securities, such as stocks and bonds, as collateral? Or is the loan secured by the home itself?

S

SweetieJean

Employee

If the the loan isn’t backed by the house, no one gets a mortgage interest deduction.

O

Opus 17

Employee

To be deductible as mortgage interest,

1. the borrower must own the home

2. the borrower must pay the interest

3. the loan must be secured by the home -- in real estate terms, it must be "perfected", usually by recording as a lien against the property with the county clerk so that the home itself is at risk of foreclosure if there was a problem with the payments.

Your arrangement fails at least 2 of these conditions, so neither of you can deduct the interest.