Mortgage interest paid on brother's house

[Bill Tubbs]

Client (female) and her brother jointly own a duplex. Brother lives in one half and the other half is rented out. They split all rental income/expenses 50/50. She also pays half of his property taxes and mortgage interest.

Regarding the property taxes on his half, she can deduct them on Sch A.

But what about the half f the mortgage interest she pays on his half? I don't believe she can deduct them on Sch A. Do the mortgage payments get added to her basis? Any other options?

Bill

[Larmil]

Client (female) and her brother jointly own a duplex. Brother lives in one half and the other half is rented out. They split all rental income/expenses 50/50. She also pays half of his property taxes and mortgage interest.

Regarding the property taxes on his half, she can deduct them on Sch A.

But what about the half f the mortgage interest she pays on his half? I don't believe she can deduct them on Sch A. Do the mortgage payments get added to her basis? Any other options?

Bill

I believe RE tax is deductible on all properties owned in US. His half of duplex is her second home for mortgage interest.

[TaxLadyinPA]

Yes she can deduct 1/2 of the half of interest expense on Sch A

You can deduct home mortgage interest if all the following conditions are met

You file Sch A
You are legally liable for the loan
There is a true debtor-creditor relationship between you and the lender.
The mortgage is a secured debt on a qualified home in which you have an ownership interest.
Pub 17 Chapter 23.

She owns the home jointly with brother and loan is also in her name with his.
She can deduct 25/25 rental mortgage interest paid (1/2 rental property divided by two owners) and 25/25 Sch A interest paid (1/2 home mortgage divided by two owners) She does not have to live there if she has ownership and liable for the loan.

[Bill Tubbs]

Thanks

Learn something every day! I thought she wouldn't be able to deduct the mortgage interest for brother's side on Sch A since she doesn't live there at all. But, I was shown otherwise... Thanks!

Bill