1 : My friend lives with her mom and sister. The mortgage
and 1098 is under the mom's name (sisters names might be on deed/title) but the
sisters pay all the house expenses (mortgage, insurance, utilities, car
insurance, ect). Sister 1 pays 75% of the expenses and sister 2 pays 25%. The
monthly expense total is transferred into the mom's account and paid for there.
For the past few years they have been taking the mortgage interest deduction on
the mom's tax return (the interest exceeds her income). Can they amend all
their taxes for the last few years and give the deduction to the sisters?
2 : How can this be broken down (IE. Sister 1 makes a lot
more, can she take the full amount or do they have to split it based on their
payment proportion?)
Answer :
1 : Having their
names on the deed to the only satisfies one of the two initial requirements for
claiming the mortgage interest deduction; the IRS also requires that they
actually pay the mort.interest. If their names are on the deed but they psy the
interest, they can deduct the interest payments. Conversely, they cannot deduct
the mortgage interest payments they make if their names are not on the deed/ or
on the mortgage to the home.So since their names are on the title (or
mortgage), they need to file amended returns to deduct their mort payments
deductions. They can deduct their mortgage payment deductions on line 11 on Sch
A of 1040, so UNLESS they itemize their deductions , they can’t itemize their
deductions. The only way to report their mortgage interest deduction is on a
Sch A with their other itemized deductions. However, this doesn't always mean
they should itemize just to deduct their mortgage interest. Instead, they
should compare the total of all expenses they are eligible to itemize to the standard
deduction available for their filing status. If the standard deduction..Read More…
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