Personal Finance
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Your son is going to take over paying your mortgage Can he deduct the interest on his taxes Does his name have to be on the loan the title both or neither?

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September 12, 2007 11:28PM

Again - he can't just pay a mortgage on anyones house and claim the has to be his residence. Then if he is paying it, on the title or not, there are court cases saying that basically he paid the interest to you and you paid the mortgage. But better be able to prove it is his home.

An interest deduction is generally not allowed if the taxpayer's liability is not primary and direct.. There is an exception to this general rule that allows a taxpayer to deduct interest he pays on a mortgage if he is the legal or equitable owner of the property, even though he is not directly or personally liable on the bond or note secured by the mortgage. The effect of this exception is to permit the deduction of interest in situations when the taxpayer-borrower is not personally liable on a mortgage of property that is used as security for a loan made to the taxpayer. The Tenth Circuit has stated that the concept of equitable title to realty for this purpose is generally limited to two situations: when legal title to property is held by a trustee, in which case equitable title is said to be in the beneficiary; and when real estate has been sold under a contract for deed with legal title retained by the seller until the purchase price is totally paid, in which case its purchaser is said to be the equitable owner during the payoff period.