house with a mortgage

[jainen]

Iffen you inherits a house with a mortgage, and you move in so it's your primary residence, is that qualified acquisition debt?

[veritas]

Interesting

Was it original debt in hands of deceased?

[jainen]

000 short

>>Was it original debt in hands of deceased?<<

Who knows? Well, undoubtedly not, since they probably only paid, like, 18K for it. Add another 50 for possible improvements, and we're still about $200,000 short.

[veritas]

I'm wondering

about this. If I gave you my house with an existing mortgage and you assumed it, it would be part purchase and part gift (or maybe not considering where I live).

So what do you think?

[S T]

Would it

Since you inherited the house and the associated mortgage, would it not qualify for acquistion debt, if you decided to make it your personal residence?

Another one of those items on the "Dreaded Deductibility of Mortage Interest" that probably is not covered.

Sandy

[Bees Knees]

And the correct answer is….

You can inherit an asset, but you cannot inherit debt. The mortgage company may allow you to assume the debt, but that is not automatic.

If you agree to assume the debt (so the bank doesn’t reposes your newly inherited house), it is treated as if you took out a new mortgage. Therefore, inheritance turns all of the existing debt assumed by the beneficiary into acquisition debt. (Citation: B.K. Rul. 2007-01)