RE taxes & mort interest on 2nd home with sister

[JAinNC]

Okay

I see that he has the right because the mortgage is in his name. The home is in both names. Does it matter that he doesn't own the entire home? If he owns one half, his half = 880K / 2 = 440K. After the down payments the mortgage balance = 670K. Can he still deduct the entire mortgage? Asking because I have calls from people who are planning to do something like this and want to know what is deductible. Every situation is a little different.

Jeannie

[joanmcq]

He doen't even need to visit, make repairs or anything. He owns a second home, makes the payments and is responsible for the payments. He gets the deductions.

[Bees Knees]

Does the taxpayer own the home? Yes, he and his sister are both listed on the title.

Is the taxpayer legally Liable for the debt? Yes, his name is on the mortgage.

Is the debt secured by the house? I assume it is.

Did the taxpayer actually pay the mortgage interest he is trying to deduct? Yes.

Is the home a second home of the taxpayer? Lets say for purposes of our discussion, a brother who owns a home with his sister and makes all mortgage payments is going to from time to time use it as a second home (such as visits, repairs, etc. etc.).

Answer: The taxpayer can deduct all interest paid as second home mortgage interest. There is nothing in the rules that says anything about pro-rating the interest based upon ownership percentages. He is liable for 100% of the mortgage interest (the mortgage is all in his name), and he actually pays 100% of the interest.

[solomon]

Does your client

own a qualified residence on which he has acquisition debt? If so, how much?

[JAinNC]

Legal liability

to deduct the interest. But in this case it is not half and half. Not sure if he prorates by percent.
There a Tax court case that rule to allow TP to deduct all mortgage interest. The taxpayer occupied the home and made all mortgage payments because his brother could not obtain financing (Uslu,U.S. Tax Court, December 16, 1997) From TheTaxBook 2006 page 4-11.
This is a different situation. I would think it might be prorated.

[KJ Judd]

I haven't seen this situation discussed. My client is helping his sister purchase a home. Downpayment of $60k from my client, $150k from sister (CA house cost $880k). Both names are on title to home. Due to sister's lower income level, only my client (brother) is on the mortgage.

Brother is making full mortgage payment including escrow for real estate taxes. I'd consider this his second home. So I'm thinking I can deduct 100% of the mortgage interest he pays. Can I also deduct 100% of the real estate taxes he pays?

Their plan is for the brother's payments to offset the difference in downpayment.