Deduct Mortgage Interest on Second Home for Federal Tax Return?
Property is actually used as second home for myself (approx. 30% of time spent, 100+ miles away from primary residence in California). Property also used by my parents as their second home. My parents, and only my parents, are on both the title and loan for the property. They no longer have the financial means to continue paying the mortgage. I, and I alone have been making the monthly mortgage payments since the beginning of the year. Can I deduct mortgage interest on the property for my own federal tax return without having to go through the trouble of submitting a grant or quitclaim deed through the county or adding myself to my parents' loan through the bank? by april_thomas_1984421 from , . Jul 30th 2013
John Moran (SimplifyMortgage)
#7 ranked lender in Arizona - 663 contributions
Hi April, thanks for posting your question here at Lender411. Unfortunately, this appears to be a question for a tax professional, not a mortgage professional. Without giving any legal or tax advice, my initial reaction was that you would not be able to deduct mortgage interest on a home in your parent's names.Have a great day and best of luck!
Pete Bass (PeteBass)
#30 ranked lender in Connecticut - 476 contributions
April;This would be better answered by a tax preparer or CPA- Hope this helps,Pete
Dave Metsker (DaveMetsker)
#35 ranked lender in Oregon - 2,318 contributions
A creative way to deal with this is, to re-characterize the property as an investment property. Your parents would turn the property over to you on a master lease, whereby you would be responsible for the mortgage payments and the taxes. Charge them a nominal rent when they use it, and charge yourselrf a nominal rent when you use it. The income and expenses (mortgage interest, taxes and repairs, etc.) PLUS depreciation, are all reported on Schedule E of IRS form 1040, no doubt resulting in a loss, which can offset your salary income dollar-for-dollar. There is no need to transfer ownership or to even inform the lender; just make the payments on time, and all should be fine.Treat the property as a business, not as a vacation retreat.
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