Who qualifies for tax deduction?

Guest 0.10 Dollars($)

My elder sister and younger sister with her husband together bought a house. The elder sister's credit wasn't good enough, so her name was taken off the title. But due to unexpected job changes, my younger sister and her husband cannot move in and so my older sister has been paying for the mortgage and property tax. Can she claim tax deductions as she is paying for the loan even if she isn't on the title. Or do you think my other sister and her husband will qualify for the deductions?

blue · Posted: Tue Mar 06, 2007 11:46 am Post subject:

Hi Pamela,

Welcome to Mortgagefit discussion board.

As per laws for elder sister to claim mortgage interest deductions, she should be liable for the debt.

Now in your context, three of them were on title of the house. But before the loan was taken elder sister was taken off the title of the house due to her credit problems. She has been helping out her younger sister and her husband with the payments. But she is not actually liable for the debt.

So she cannot claim tax deductions. But her younger sister and her husband are allowed to claim mortgage interest deductions as they own the property and liable towards the mortgage.

Do let me know if you have any other questions.

Thanks
Blue

Guest 0.10 Dollars($)

you can read what IRS says on who can deduct mortgage interest from this page: http://www.irs.gov/publications/p936/ar02.html#d0e188

Caron

Hi Pamela,

Welcome to our forums.

Neither of your elder and younger sisters can qualify for the deductions on mortgage interest and property tax. Even thought your elder sister made payments, she cannot claim for the deductions because her name was taken off the title.

Your younger sister and her husband can neither get the tax deduction benefits although their names are on the title. This is because the payments were not made by them.

Your younger sister and her husband can add your elder sister to the title by using a quitclaim deed. Then she will be eligible for the deductions for future interest and property tax payments.

Thanks,

Caron.

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