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Employee
December 1, 2018
Question

Deduct Mortgage Interest on Home Inherited After Father's Death

  • December 1, 2018
  • 1 reply
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My father passed away in February 2012 and he did not have a will.  An estate was established in his name and my grandfather was the executor of my father's estate.  In the months that followed my father's passing, my brother and I (the only heirs to the estate) received a large insurance settlement.  Unfortunately, it was not enough to pay off the home's mortgage, but it was enough to pay for our cost of living for several years.  For approximately five years (until March 2017), I made payments on the home's mortgage until I was finally able to get my own mortgage and purchase the house from the estate (sort of a modified refinance) for the balance due on the original mortgage.  In doing so, I was finally able to close the estate.

 

Each year, my grandfather filed estate taxes, but I do not know the specifics of these taxes.  He spoke with his tax adviser who mentioned my brother or I being able to claim some sort of deduction several years down the road once we were established in our careers in order to take advantage of said deduction.  I am not 100% certain he was referring to the mortgage interest. 

 

I am wanting to know if I am eligible to deduct the mortgage interest paid on the original mortgage, as I was living in the home, responsible for its upkeep and maintenance, and one of two heirs to the estate (which included the mortgage).  Thoughts?

 

Thanks in advance,

Brandon

    1 reply

    Carl11_2
    Employee
    December 1, 2018

    For starters, the mortgage interest can only be claimed on one tax return. Period. So if the state has already claimed it, nobody else including you can claim it. It doesn't matter that you paid it either.

    For 2018, in order for you to claim mortgage interest you will have to meet three criteria and be able to prove all three if audited on it.

    - You must have a demonstrated vested interest in the property. (If it's your *primary* residence in 2018, that's your vested interest.)

    - You must actually have made the payments.

    - The estate does not pay it or claim it on the estate return.