Taxpayer's parents added him to the title of the house in 2006 so he became 1/3 owner of the house. Taxpayer is the one who has been making the mortgage payments and paying the property tax ever since. But the taxpayer still have not added his name to the mortgage loan. So his parents are still the loan holders and the 2006 Form 1098 mortgage interest statement was still issued to his parents only. Is there any way that the taxpayer can claim the mortgage interest deduction in 2006 since he is the one who has paid for the mortgage?
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The tax book page 4-11 says the taxpayer must be legally liable for the loan to deduct interest on the home mortgage.
There is a court case exception to this listed, but that case had a reason why the court allowed for a rare exception. Your case seems to be they were too lazy to bother changing the name on the loan. It would never fly in court.
No deduction allowed. -
Perhaps
Where a taxpayer isn't directly liable for a mortgage debt, he is still entitled to a deduction for the mortgage interest payments that he actually makes, but only if he is the legal or equitable owner of the mortgaged property. Reg § 1.163-1(b)Comment
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Agree
with Skhyatt.Comment
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Assume that everything above is true. How does he claim the mortgage interest? His name is not on the loan so the IRS does not have the record that he has paid any mortgage interest. They are going to reject the deduction if they can't match the amount that the taxpayer claims on line 10 of Schedule A with any mortgage interest paid reported by the lender. Is it correct?Originally posted by skhyatt View PostComment
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