Name on mortgage

[solomon]

Travis, you were correct the first time. See Sec. 280A(d). Interest and taxes only on Sch A when below FMR.

[travis bickle]

thank you Bob

Travis, aren't they allowed to offset Income with expenses but can not report a loss?

I do not know how I came to have typed what I did. Thank you.

Here is the url for the IRS' Tax Topic 415 (rentals, personal days, relatives, etc):
http://www.irs.gov/taxtopics/tc415.html
and that url clearly supports your -- correct -- statement.

Depending on who pays the mortgage interest, taxes, casualty losses, etc. it may be more advantageous to itemize those amounts on Sch A.

Again, thanks

[BOB W]

. . . because if the parents do not rent it out for fair market value, they are not allowed to claim expenses

Travis, aren't they allowed to offset Income with expenses but can not report a loss?

[travis bickle]

don't think this is an option . . .

think it would be possible for the parents to "rent" the house to the son? Set it up so the rent equals the PITI and then parents could also depreciate home, etc??
Just a thought.
Larry

. . . because if the parents do not rent it out for fair market value, they are not allowed to claim expenses

[erchess]

Thanks for your last post JG

No offense taken here either - and if I may say so I think you are generally one of the more knowledgeable posters on this site - I look for threads you started or posted on.

[fliszt]

JG, do you

think it would be possible for the parents to "rent" the house to the son? Set it up so the rent equals the PITI and then parents could also depreciate home, etc??
Just a thought.
Larry

[JG EA]

When "get away with" I didn't mean it the way you seem to have taken it. I meant that they would not be breaking the rules. I did not mean to imply that you and they were attempting to do something shady.

I can see where you are coming from. People say that they can get away with this or that meaning that yes they are breaking a rule but for some reason or other they don't think they will receive the sanctions called for. People also say that they can get away with something in the sense that they will not be injured doing something that another might regard as dangerous or that might be dangerous for a less skilled person. I was careless in my use of language and I am sorry if I offended you.

No offense at all, just wanted some thoughts and I do appreciate your help. And I am sorry if I offended you while appearing to be offended!!

I still think my point was correct. - The parents can treat a mortgage that they pay as a mortgage on their second home even though they let their son or for that matter you or me live in said home. If one or the other of them owns the first social security number on the F1098, then no paperwork between son and parents is called for. If the son's ssn is first on the paperwork then he should issue his parents a F1098. I have seen situations similar to this one where the son expected to deduct the interest himself. I think it would be good if someone cautioned him that you can't deduct what you didn't pay. I deal at least weekly with people for whom that is not self evident. The people I have dealt with are not intentionally unethical but I would have to agree that they are uneducated as well as careless and or reckless with regard to their taxes.

This and Gabriele's post has made me think through a couple of things. Who really is paying the bills? I need to find that out.

[erchess]

Apology to JG

When "get away with" I didn't mean it the way you seem to have taken it. I meant that they would not be breaking the rules. I did not mean to imply that you and they were attempting to do something shady.

I can see where you are coming from. People say that they can get away with this or that meaning that yes they are breaking a rule but for some reason or other they don't think they will receive the sanctions called for. People also say that they can get away with something in the sense that they will not be injured doing something that another might regard as dangerous or that might be dangerous for a less skilled person. I was careless in my use of language and I am sorry if I offended you.

I still think my point was correct. - The parents can treat a mortgage that they pay as a mortgage on their second home even though they let their son or for that matter you or me live in said home. If one or the other of them owns the first social security number on the F1098, then no paperwork between son and parents is called for. If the son's ssn is first on the paperwork then he should issue his parents a F1098. I have seen situations similar to this one where the son expected to deduct the interest himself. I think it would be good if someone cautioned him that you can't deduct what you didn't pay. I deal at least weekly with people for whom that is not self evident. The people I have dealt with are not intentionally unethical but I would have to agree that they are uneducated as well as careless and or reckless with regard to their taxes.

[Gretel]

JG, I don't see any problems if parents claim interest if they pay the mortgage. They should aIso pay the taxes. Your post almost sounded like to leave the possibility open to switch back and forth, which would be a bad idea.

If later on sons wants to claim the interest they should enter into a contract and sons needs to make payments.

[JG EA]

that as long as the son does not try to report the interest on his return the parents can get away with putting it on theirs..

The parents do not want to get away with anything - that is why I'm asking fellow preparers their opinions.

[erchess]

I would think

that as long as the son does not try to report the interest on his return the parents can get away with putting it on theirs. If one of the parents' ssn is on the mortgage statement there is no extra paperwork but if the son's ssn is there then he will need to issue a statement to his parents.

[JG EA]

(This is a different client than the one in mind for my other post.)

Here's my thinking on client's situation. Parents are helping a son buy a home. They were going to co-sign, but that was more expensive so they purchased, put son on the title (second position) and took out the mortgage in their (parent's) name.

It will be better for the parents to take as second home interest since (expecially this year) the interest will not be enough for the son to itemize. So, I am thinking that the parents should count as a second home since a family member will be living there.

I know there was a case where it clearly showed in such situations that the son could count the mortgage since it was in reality for him, but that doesn't mean they must count it as the son's?

Is there any hangups to my reasoning here?