Mortgage Interest Tax Deduction ?

Question

The house is titled in my husband's name, but the loan is still in mother in law's name. My husband and I have paid the mortgage all year. Who claims the income tax deduction, my husband or my mother in law?

Answer 1

Interest statement from the mortgage company will come in mother in law's name. Better ask your tax preparer that question. I'd be interested to hear the answer! what my first thought was: Legally mom owns the house and your purchasing from her on land contract...she claims the mortgage interest..but she also has to claim your payments as income. But I'm not certain this is correct. Never seen a mortgage company that would title a home in one name and carry the mortgage in another......

Answer 2

I suspect that the Form 1098 from the mortgage company is going to come with your mother-in-law's social security number on it. If that's the case, it's going to complicate things a bit. What you should do is write up a loan agreement with your mother-in-law, stating that you are borrowing the loan amount from her, and will be paying the mortgage payments based on the rate of interest that's on the mortgage. Both parties need to sign the note. After that, you can claim the mortgage interest on your return (but not on the same line that you would have if you had received the 1098), and your mother-in-law will need to pick up the amount you paid as interest income.

I know, I know-a ton of paperwork and a pain in the "well known", but that's what the IRS will want you both to do. You may want to have a CPA do your return this year (your mother-in-law as well), just to make sure that this transaction goes smoothly for both of you.

Answer 3

Nobody, actually.

Only the person who is legally obligated for the payments is entitled to the deduction -- the MIL in this case. However, she also actually needs to pay it to get the deduction.

Since you're not obligated, you don't get it.

Since MIL didn't pay it, she doesn't get it either.

Here's another kick in the teeth. If you made mortgage payments that your MIL was obligated for, those payments are a gift to her from you. If the total amount for the year exceeds the annual gift tax exclusion amount, YOU will have to pay the gift tax on those payments.

BTW, mortgage "wraps" must be VERY carefully crafted to preserve the deduction for the interest paid. And they MUST be recorded as well. But that won't help you for last year even if you go that way and do it right. For 2006, nobody is LEGALLY entitled to the deduction.

Answer 4

your loan pastime on your conventional residing house and a 2d residing house that you do not employ out for better than 14 days is all deductible, there are some limitations yet you probable do not attain those degrees and also you finished your federal go back first and quite many times the state follows a similar deductions except for some exclusions(which loan pastime isn't one)

Answer 5

If you paid it, you get the deduction. There has to be a "nominee" notation since the mortgage is attached to her SS#. She indicates that you are taking the deduction adn you indicate her # and that you are taking it.

Answer 6

your mother-in-law