Hoh if stop paying mortgage?

[sandigi]

To qualify for HOH status, you must pay more than half the cost of keeping up a home for the year.
What if TP stops paying her mortgage?

She then has not "paid" the big 3 expenses: mortgage interest, property taxes, and property insurance.
Most likely not doing any repairs and maintenance either.

According to the IRS worksheet, doesn't that mean that her utility charges, food consumed on the premises and "other household expenses" must equal over half of the Total cost of Keeping up a home?

By the way, what are "other household expenses?"

I have googled my fingers off and can't find the answer to this.

Not sure if I'm posting this link correctly. It is for the IRS worksheet "Cost of Keeping up a Home."
So sorry if the link doesn't come through right. It's from pub 17.

http://taxmap.ntis.gov/taxmap/pub17/p17-014.htm

[appelman]

Fascinating question.

From Pub. 501:

"If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home."

So I would say that if no one else is paying those expenses, they would be disregarded in the calculation. On the other hand, if the bank is paying the property tax, that clearly has to be figured in as payment by others.

[sandigi]

isn't "somebody" paying?

From Pub. 501:

"If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home."

So I would say that if no one else is paying those expenses, they would be disregarded in the calculation. On the other hand, if the bank is paying the property tax, that clearly has to be figured in as payment by others.

Thank you for your reply. I looked at it that way too. But although the taxpayer will say nobody is paying the mortgage interest, in the end isn't "somebody" paying? The government bail out, the bank, the taxpayers . .

So in the worksheet "Total Cost" column, there is a cost . . . whether it is currently being paid by "others" or not .
And if she has PITI in her mortgage, then the bank is paying the interest and taxes, right? Or somebody might be buying the tax certificate which I can find out online.

[appelman]

I don't know that you really need to pursue that line of reasoning.

If an indigent person gets free care in a hospital emergency room, obviously someone will end up paying for it, but I wouldn't include that in his household expenses. If a default loan is foreclosed and the debt cancelled, nobody ends up paying for it. The note holders are out the money, but they aren't exactly "paying" anything, and I certainly wouldn't consider it part of the debtor's household expenses.

[Nashville]

Numbers Numbers Numbers

I like the Appleman's approach on this one. As looked at by our industry, most definitions of "support" fall into two situations:

a) The taxpayer is furnishing over 50% of support, or
b) The taxpayer is furnishing more than any other party.

The Head of Household support test is b) above.

This means if the taxpayer is supposed to pay $10,000 in household expenses and only pays
$1500, the "support" test is satisfied as long as no other single party is paying MORE than $1500.
And I also agree that "no other single party" should be specific, and not be interpreted to
encompass such nebulous extremes as "American taxpayers" or "society as a whole."

[Kram BergGold]

Correction to Nashville

You wrote that TP would get H of H if no other person provided more than the TP. This is incorrect. If two or more people or institutions provided more than the TP, then TP would not be H of H.

[sandigi]

"Support" and "Cost of Keeping up Home" not same thing

Thank you Appleman and Nashville for your replies. I see Appleman's thinking on nobody paying the Interest on the mortgage. As an example, let's say TP pays utilities $4000 and food $5200. Bank pays insurance $2000. Somebody bought the tax certificate $1020. So the $9200 she paid is more than 50% of the cost of keeping up the home.

I think we are confusing "Support" with the HOH filing requirement of "Cost of keeping up a home."
They are not the same thing.
See number 2 below in my copy/paste from IRS website.
There is also a "Cost of Keeping up a Home" worksheet on that link if you scroll down.

http://taxmap.ntis.gov/taxmap/pub17/p17-014.htm

Below is copied from irs link above: (I'd put it in italics, but I don't know how to do that on this message board)

"You may be able to file as head of household if you meet all the following requirements.

1.You are unmarried or "considered unmarried" on the last day of the year.

2.You paid more than half the cost of keeping up a home for the year.

3.A "qualifying person" lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the "qualifying person" is your dependent parent, he or she does not have to live with you. See Special rule for parent, later, under Qualifying Person"

[Y2KEA]

Something to consider

Somebody is paying certain loan expenses. If the lender is paying the taxes and insurance, then they are no doubt advancing the funds to the borrower and adding the amounts to the loan balance. Therefore the the borower has in fact paid these amounts.

[Gary2]

Somebody bought the tax certificate $1020.

Isn't there a legal and tax difference between paying the taxes and buying the tax certificate? Paying taxes is an expense, buying a tax certificate is an investment.

[sandigi]

I don't understand your question

Isn't there a legal and tax difference between paying the taxes and buying the tax certificate? Paying taxes is an expense, buying a tax certificate is an investment.

My point was that TP did not pay taxes on her home so she cannot include it in her payments of maintining her home for purposes of seeing if she can file HOH.

As far as the other party who "bought the tax certificate" and "paid her taxes," I have no idea how that is treated. I have not had that situation yet. But am I missing something and does it apply in my HOH question?

[sandigi]

Even though she paid lender no money?

Somebody is paying certain loan expenses. If the lender is paying the taxes and insurance, then they are no doubt advancing the funds to the borrower and adding the amounts to the loan balance. Therefore the the borower has in fact paid these amounts.

I would think the borrower has no expense until she has actually "paid" it.

[FEDUKE404]

Buying tax certificate

I must have lived a sheltered life.

Can someone explain to me what "buying the tax certificate" means?

I've always operated under the logic that taxes (to be deducted) must both be a legal liability to and paid for by the person.

Or from the other side, why would anyone wish to "buy" a tax certificate in the first place??

Thanks in advance for un-confusing me on this topic.

FE

[appelman]

If the county records show that someone paid the taxes...

I would consider that an expense paid by others in determining HoH eligibility.

[sandigi]

I must have lived a sheltered life.

Can someone explain to me what "buying the tax certificate" means?

I've always operated under the logic that taxes (to be deducted) must both be a legal liability to and paid for by the person.

Or from the other side, why would anyone wish to "buy" a tax certificate in the first place??

Thanks in advance for un-confusing me on this topic.

FE

Maybe I didn't use the right terminology. In a nutshell: If I don't pay my property taxes here on my Florida home. 60 days after they are due, the county holds a sale of tax certificates to collect the unpaid real estate taxes. The "investor" who bids (I think they bid on the interest rate the certificate will pay - up to 18%), then buys the tax certificate.

He pays the county the tax $ and has a lien against my property and he gets interest on his money when he gets paid the back taxes. That's why to buy a tax certificate.

Yes, I agree with you on the taxes (to be deducted). Your taxes owed. Your money paid.

[Burke]

Maybe I didn't use the right terminology. In a nutshell: If I don't pay my property taxes here on my Florida home. 60 days after they are due, the county holds a sale of tax certificates to collect the unpaid real estate taxes. The "investor" who bids (I think they bid on the interest rate the certificate will pay - up to 18%), then buys the tax certificate.

He pays the county the tax $ and has a lien against my property and he gets interest on his money when he gets paid the back taxes. That's why to buy a tax certificate.

I had never heard of this either, but what a good deal for the county. Not so good for the owner, but at least he doesn't have the home sold out from under him for the amount of back taxes.