question about tax deductions for sigle wide and land owner?

Question

My inlaws took out a loan in there name for a house for my husband and I. WE PAY all the morgage payments,taxes, insurance, ect. They make it seem like they only get a couple hundred $ back a year (on their taxes) for this house. I was browsing some sites and they said more like $4500, but I am not sure if that is correct. So can anyone give me an estimate on what they might get. The apprasal is valued at atleast 80,000 could possibly be more. We bought the house for 54,000
the intrest rate is 8.9500. Any help would be great!! Thanks

I know you are trying to help, but I wish you would read my question before you answered. My husband and I don't want to claim the taxes on this house. We were just wondering how much his parents got.

Answer 1

If the loan is in their name, and you are actually paying the mortgage, then they don't legally even get a deduction for it. You are only allowed to deduct what you actually pay, and only if you are the one required to pay it - so you can't deduct it either.

Even if they did, there's no way they'd save $4500 on their taxes due to the house. The deduction might be that much - but the deduction amount is NOT what you actually save in taxes, nowhere near! Depending on what other itemized deductions they have, a couple hundred dollars is probably a lot closer to what they actually save unless they already had enough deductions to itemize, and then it might be more like $700 or so.

Answer 2

If you and your spouse are not legally liable for the debt, you can not take the deduction for the Mortgage interest that you pay, and as your in-laws did not actually pay them, they should not be claiming the expense as an itemized deduction.

When Mortgage interest and other qualified expenses are used as an Itemized deduction it lowers the amount of Taxable income, which in turns can lower the tax liability. You do not deduct the full amount of the mortgage payments, only the interest paid.
In the circumstances you have described neither parties could claim this deduction unless, you have a legal contract with your in laws that mets the legal requirements for you to be able to claim it.

See Publication 530 and 936
http://www.irs.gov/publications/p530/index.html
http://www.irs.gov/publications/p936/index.html