Mortgage Interest & Real Estate Tax

[Gary]

If a taxpayer pays his brother's mortgage and real estate tax, can he deduct this on Schedule A? Does it make a difference if he lives in the house or not? Please help.

[KBTS]

This is discussed in TTB on pages 4-9 and 4-11. Basically if he does not own the house and is not legally liable to make the payments, he cannot take the deductions.

[sea-tax]

Agree with KBTS I will also add that the brother of your client either has rental income to pick up or your client has a gift tax return to file if he paid the brother more than the annual gift exclusion amount.

[BHoffman]

Gary - unless the paying brother has an equitable or beneficial ownership interest in the house, I think he may not be able to deduct the interest or the RE taxes. If you believe otherwise, then perhaps line 11 on Sch A but you probably are going to get a letter from IRS about it.

Here's a information link:

http://www.nysscpa.org/cpajournal/1998/0898/Departments/D60898.htm

It is old and may be outdated, but nysscpa.org is usually a reliable source.

[Gary]

Thanks

Thanks everyone. This is what I thought, but I wanted confirmation.

Gary