Client has mortgage interest on main home and is able to itemize deductions. Taxpayer purchases a second home for his daughter to live in. Taxpayer owns the property (has the mortgage in his name), but daughter makes the mortgage payments and lives in the house. Can the taxpayer take a Sch A mortgage interest deduction for the second property?
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Not sure how you can deduct something you didn't pay for. Almost sounds like a rental issue? Are they paying for other things as well? Insurance, property taxes?
Chris -
Doesn't sound like an equitable ownership situation (which would only apply to the daughter anyway). Payments that a tenant makes toward the landlord's expenses are treated as rent.
So from what was presented, I say it is a rental to a relative at below FRV, therefore personal use, and the dad can deduct the mortgage interest on his second home. (Although since a mortgage payment usually consists of both principal and interest, it's possible that it is actually FRV, that is for you and/or taxpayer to determine).
It would be much "cleaner" if the daughter would just make a payment to dad every month, then let dad pay his own expenses."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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