A couple lives together and are not married. The mortgage is in one person's name (because of credit, let's say) and that person doesn't work. The other person is paying the mortgage but the mortgage interest statement Form 1098 is in the unemployed individual's name. Can the one paying the mortgage claim the interest on their Schedule A even if their social security number isn't listed on the 1098?
-
-
Are they both on the title?
If the person paying the bill doesn't have legal responsibility for it or have a financial interest in the property to protect, they can't claim the deduction. If their SSN isn't on the 1098 that means that one isn't on the loan."A man that holds a cat by the tail learns something he can learn no other way." - Mark Twain -
Not necessarily, the 1098's normally only report in the primary social security no. I have a couple of these joint loans and I attach an explanation statement w/ the name and the social sec no of the person who received the 1098 and the amount that each actually paid and are deducting.Originally posted by taxmandan View Post
But both must have legal title and financial responsibility for the mortgage.Comment
-
You are correct, I took from the OP that the person paying the mortgage wasn't on the loan, and my last comment is in error regarding the listing of SSN on the 1098.Originally posted by Jesse View Post"A man that holds a cat by the tail learns something he can learn no other way." - Mark TwainComment
-
I just learned something
We all know that it is rare for anyone to pay a mortgage without having their name on the title and on the mortgage but I didn't know that either, let alone both, had to be in order for the mortgage interest someone actually paid to be deductible. Before today if someone had told me that they paid their neighbor's mortgage out of the goodness of their heart I would have let them deduct it unless they had too much overall mortgage debt. I would of course have asked their neighbor to verify the facts in writing for me.
I did at one point have a client present me with what looked like a valid mortgage interest statement but then I noticed that the lender was "The Intergalactic Federal Credit Union" and that there were various other irregularities including the fact that the paper seemed like ordinary paper for a printer or copier. The man insisted that it was a valid statement and that the property in question was on Alpha Centuri. When i wouldn't deduct the interest he left.Comment
-
From TTB 4-11
Legal Liability to Make Payments
A taxpayer must be legally liable for the loan to deduct interest on
a home mortgage. Payments made on a loan in which the taxpayer
is not directly liable are deductible only if the taxpayer is the legal
or equitable owner of the real estate. [Reg. §1.163-1(b)]
Example: Murphy lives in his mother’s house and is not listed on the
house title or mortgage. Murphy makes her mortgage payments because
he is supporting her as his dependent. Murphy cannot deduct
the interest as home mortgage interest because he is not liable for
the debt and is not a co-owner of the house.
Court Case: Taxpayer could not obtain financing to purchase a home
due to filing bankruptcy. The taxpayer’s brother obtained financing and
took legal title to the property. The taxpayer occupied the home, made
all mortgage payments, and paid all maintenance expenses. The court
allowed the taxpayer to deduct the mortgage interest because he was
obligated to make the mortgage payments per an oral agreement he had
made with his brother. (Uslu, U.S. Tax Court, December 16, 1997)Comment
Comment