I am reading through the laws and regulations about who can deduct mortgage interest and I was going through the WebCD and I noticed the following paragraph from Reg 1.163-1:
(b) Interest paid by the taxpayer on a mortgage upon real estate of
which he is the legal or equitable owner, even though the taxpayer is
not directly liable upon the bond or note secured by such mortgage, may
be deducted as interest on his indebtedness.
As I interpret this regulation it seems to me that it reads that you can be on title of a house but not on the actual loan. And if you make payments to that loan that you are not liable for it is deductible because you are the legal owner? Is what I am thinking correct or am I way off? I always thought you had to be both liable for the loan and the legal owner on title or equitable owner to deduct mortgage interest. Let me give you an example.
A boyfriend, his brother, and the girlfriend buy a house together. All three are on title to the house so all three are legal owners. The only one qualified to get a loan was the boyfriend so the loan is in his name only making him the only one legally liable for the loan. As I read the reg above it seems as if all three make the payments on the loan then they can all three deduct the interest because they are legal owners. Am I right?
Thanks!
GTS1101
(b) Interest paid by the taxpayer on a mortgage upon real estate of
which he is the legal or equitable owner, even though the taxpayer is
not directly liable upon the bond or note secured by such mortgage, may
be deducted as interest on his indebtedness.
As I interpret this regulation it seems to me that it reads that you can be on title of a house but not on the actual loan. And if you make payments to that loan that you are not liable for it is deductible because you are the legal owner? Is what I am thinking correct or am I way off? I always thought you had to be both liable for the loan and the legal owner on title or equitable owner to deduct mortgage interest. Let me give you an example.
A boyfriend, his brother, and the girlfriend buy a house together. All three are on title to the house so all three are legal owners. The only one qualified to get a loan was the boyfriend so the loan is in his name only making him the only one legally liable for the loan. As I read the reg above it seems as if all three make the payments on the loan then they can all three deduct the interest because they are legal owners. Am I right?
Thanks!
GTS1101
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