Deed in Company Name-Mortgage is Personal

[anu31402]

I have a new client who bought a residential property and paid mortgage in early January of last year in his name. 3 months later he said he sold the company to an s-corp he incorporated and so changed the Deed to the company. But the Mortgage is still in his name.

Please, any direction on how best to treat this? Any citation or publications?

[Bees Knees]

Tell him to have the mortgage changed to his company. His S corp cannot deduct interest on a mortgage if it is not legally liable for the debt. [Reg. §1.163-1(b)]