Parents purchased a house for child. The loan is in the parents' name and the mortgage statement comes in parents' name.(I wpuld imagine the home is in the parents' name also) Child makes the payment along with the interest. Is the interest taxable to the parents? Ive changed my return twice, can't quite wrap my head around this.
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You need to rethink/reword your post.Originally posted by JenMO View Post
There is NO interest income.
There is interest PAID to the bank.
The parents didn't purchase anything, it appears they signed a loan for their kid. You need to see if the Kids name is on the loan/co signer.
You might have a rental house for the parents if not co signed and/or the Kids name isn't on the house?
Chris -
that's the complication. Child does not live in house, has moved away, but is still making payments. I don't believe the child's name is on the deed.Comment
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If the house is deeded to parents they might have investment interest, deductible only to the extend of investment income.Comment
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Why would the child be making payments on a house that is not theirs? You need to find out some more info.Originally posted by JenMO View Post
ChrisComment
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I'm guessing the child could not get the loan, or he took over the payments and could be on like a contract for deed. but is the interest the child is paying the bank on the loan of the parents taxable to the parents?Comment
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Why would it be taxable to the parents?!?Originally posted by JenMO View Post
If you going to say the interest is taxable to the parents, then the principle would have to be as well.
Quit guessing and get some facts please.
ChrisComment
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Read up on Equitable Ownership to see if that fits your fact situation.Comment
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