Question

Clarifying Tax Deduction Eligibility for Mortgage Interest Paid by a Co-Owner

Forum|Forum|1 year ago
November 22, 2024
3 replies
0 views

I bought a house in the CA, USA with a mortgage solely in my name, but the deed includes both my name and my mother's name. My mother fully pays the mortgage, including the interest.

I am moving out of the U.S. and will no longer have U.S. income. Since my mother still lives in the house and pays the mortgage, I’d like her to deduct the mortgage interest from her taxes.

1. Is it possible for her to deduct the mortgage interest even though the loan is in my name?

2. If so, what steps should we take (e.g., formal agreements or documents) to allow her to claim the deduction legally?

3. Are there any potential issues or IRS guidelines we should be aware of when making this adjustment?

I found some articles about allowing to claim tax deductions for mortgage interest if the co-owner has "equitable ownership" but can't find any details on how to do it.

Thank you for your guidance!

B

Bsch4477

Employee

Since she made the payments and is a co-owner she can deduct the interest.

O

Opus 17

Employee

To deduct mortgage interest, the taxpayer must be a legal owner, or have an equitable ownership interest, and be the person who actually pays the mortgage. They don't have to be a listed borrower.

To deduct property taxes, the taxpayer must be a legal owner only (equitable ownership doesn't count), and be the person who actually pays the property taxes.

M

Mike9241

IRS reg 1.163.1 allows her as the equitable owner to deduct the interest even though she's not on the mortgage. In Turbotax she would use the Mortgage Interest part (under "Your Home" on the Deductions and Credits tab). As she goes through answering the questions there's one about her being on the 1098 to which she'll answer no. she'll need to provide your name and the full address that's on the 1098 that you'll get.

deducting the mortgage interest will only benefit her if that deduction with other schedule A deductions exceeds her standard deduction.