Husband and wife own NC home. Husband loses a CT rental house to foreclosure, left from his prior divorce. Due to the foreclosure, they can't refinance their NC home to lower interest rates. But, his parents can. Mortgage on their principal residence in now in his mother's and father's names and SSNs. Not sure if husband and wife are paying the lender directly or paying his parents, but they are paying the mortgage. Calling them Saturday. Who can claim the mortgage interest deduction? (The parents are also my clients.) Is this one of those "equitable ownership" cases? Since all are my clients, the logistics can be worked out. But, H&W are in the 25% bracket and his parents only 15%, so if a case can be made that the H&W should claim that's more beneficial to the whole family. (When the foreclosure drops off their credit reports, 7 years?, they will finance in their names again as his parents retire.)
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It sounds like a case of equitable owner to me. H&W can take the deduction. You would have to put the the mortgage interest on line 11 of schedule A and put in the parent's name, ssn, address.
Here is a website that explains it very well:
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That was perfect, Dany. Thank you. I'm printing the article to put in my client's folder.Comment
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