NLIC.org

Mattie Said:

Mortgage interest deduction?

We Answered:

Hello There!

Well, I have a few questions for you.

Do you live in the house? Why is the house in your name? That is a very dangerous thing to do for a friend or a relative! You could end up with really screwed up credit if the house should ever go into foreclosure or have any late payments on the mortgage.

You should immediately go to a lawyer, and get your cousins name added to the ownership of the house. Yes, get it in both names if you aren't paying any thing for it. And GET A LEASE FROM YOUR COUSIN! That way you are now in a business owning and renting the house to your cousin, and you can take all the deductions!

YUP! The mortgage interest, the real estate taxes, and any repairs! That will give you an incredible tax deduction. And with his name also on the mortgage, you can SPLIT the deductions if you want, count half of what he pays for these things as income, and off set it with half the costs. This will give you both Tax Advantages! And with income low, you would be both maximizing the deductions against your incomes and get nice big fat refunds.

If his income is just enough to pay the bills, he probably isn't getting the best Tax Deductions anyway! So, some of the Tax Advantages are probably just going to waste. See a good Tax Accountant or Tax Lawyer with him, and they can do the right thing as far as sharing the tax advantages of owning a home for both of you.

You both need to sign agreements as to how much each of you are taking as a Tax Deduction to keep this all legal.

Please, see somebody who knows about this. Someone who can get the right papers signed by both of you, so you both can maximize the tax advantages of home ownership. It is possible to do this. And since you were nice enough to put a home for him in your name, and he probably doesn't get the total tax advantage anyway, this could be a win/win for both of you.

Good Luck, I know this can be a touchy situation with family members, but maybe he will understand that he isn't getting all that great of a tax break, and he could probably get the same advantages and share the remainder with you.

Think about it. If he loses $100 off the full potential of the tax advantage he gets, and you can get $2000 of a tax advantage, shouldn't he do that for you? Yeah, it can work out that way.

It can be done by a sharp accountant or a Tax Attorney. Do it!

Mabel Said:

Rental property - how to report Mortgage interest paid and insurance paid?

We Answered:

How many days have you rented the home? Have you used the home for personal use.

If strictly a rental property then report on Schedule E.

Ivan Said:

Can I deduct the property taxes and mortgage interest when I file my taxes in MD?

We Answered:

You can use mortgage interest and property tax as a deduction for your Federal Income Tax. Assuming that you have enough deductions to itemize, you would list these on Schedule A.

However, you cannot use these deductions for your MD state income tax filing.