Discussion:Mortgage interest and real estate taxes
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Discussion Forum Index --> Tax Questions --> Mortgage interest and real estate taxes
| 8 April 2006 | |
| i have a son taxpayer who pays mortgage interest and real estate taxes but the residential property is in his father's name. question is that can he deduct these payments in his tax return | |
| 8 April 2006 | |
| I think the rule on that is, the father can't take it because he didn't pay it, and the son can't take it because it's not his property. Nobody gets it. | |
| 8 April 2006 | |
| If the son is the "equitable owner" of the property he may deduct interest and taxes that he paid -- even though he is not listed on the title or the mortgage. See Reg. ยง 1.163-1(b). | |
| 8 April 2006 | |
| It's on the 2005 EA test and they said the father since he owns the property and is liable for the payment. I thought neither but I got it wrong. | |
| 9 February 2007 | |
| I was under the assumption that the property taxes would not be deductible, in this case by son, because ONLY individual actually on title is allowed to deduct property tax, unlike mortgage interest, where the beneficial rules come into play and section 1.163-(b). | |
| 9 February 2007 | |
| Under case law, the beneficial owner may deduct the property taxes imposed on his property. | |
Seattlemojo (talk|edits) said: | 15 July 2007 |
| what constitutes Beneficial ownership?
Does monetary consideration need to be exchanged? If person "A" owns the home (subject to a mortgage) and person "B" moves in and helps to pay the mortgage as well as its share of the utilities and upkeep on the home - though "B" has no financial obligation nor equity, can "B" still claim its proportional share of the interst payments on their ("B"'s) income tax as a deduction on Schd A. "A" and "B" are unmarried, "B" is not on either the Mortg or the Deed | |
| 16 July 2007 | |
| Since B has no equitable ownership, B cannot claim deductions for taxes or interest. | |
Seattlemojo (talk|edits) said: | 16 July 2007 |
| Riles
Thanks - again for your insight. My question though involves the concept of "Beneficial" vs "Equitable" - or are they the same? (as oppossed to "Legal" ownereship) Would "B' have any "beneficial" status - given "B' does most of the labor around the house, repairs, remodels,etc??? Thanks MoJo | |
| 16 July 2007 | |
| Beneficial ownership is the same as equitable ownership (benefits and burdens of property ownership). | |
| 16 July 2007 | |
| There are good discussions on equitable ownership in Tax Court cases. The "classic win" for a taxpayer is Uslu TC Memo 1997-551. You can read a very recent case which shows a taxpayer loss (using the same fact pattern as the original post) Nair TC Summary 2007-116. The judge cites examples of "wins" v "losses" for taxpayers. A
It is NOT easy to establish equitable ownership. Merely paying the mortgage is usually far short of the criteria. As Riley notes the taxpayer must show he/she assumed the benefits & burdens of ownership. | |
Seattlemojo (talk|edits) said: | 20 July 2007 |
| Thanks all | |
