Who is entitled to tax write off in a Joint tenancy
I am a co owner to a house my mom purchased. She has since purchased another home and added me to title as a joint tenant for the purpose of me refinancing the loan into my name then quit claiming her off. Our argument is this. I decided not to refinance but just add my name to the loan and now she demands I refinance and give her $50,000 plus she will continue to take the tax write off until it is refinanced. I have lived in the home 5 years and made the payment to the mortgage co every month on time and now that I am on title I feel this tax write off is now mine not hers. Can she still take the tax write off on this house even though I am on the title as a joint tenant?
Re: Who is entitled to tax write off in a Joint tenancy
Since you are on the loan and the title, and you are the one paying the interest (and I assume the taxes), you are entitled to take the deduction for interest and taxes. If your mother does so, too, and she is audited, she would be the one required to adjust her return.
My question is, why are you not refinancing? Interest rates have never been lower, and if you ever need to sell, you will need your mothers blessing. You could probably dramatically reduce your payments.
Food for thought.
Ken Koenen
Koenen & Tokunaga, P.C.
5776 Stoneridge Mall Rd., Suite 350
Pleasanton, CA 94588
Re: Who is entitled to tax write off in a Joint tenancy
The rules on deductibility of mortgage interest are complex. It is not enough that you actually PAID the interest to give you the right to DEDUCT it. Interest paid by a child on a parent’s mortgage is not deductible by the child, and vice-versa.
In general, residential mortgage interest is deductible only to the extent that the payer (1) either pays the amount or accrues it as a liability during the tax year, AND (2) the payment or accrual results from a valid and enforceable obligation to pay a fixed or determinable sum of money.
The right to the deduction is not based upon ownership of the home, but upon obligation to pay the interest, i.e. the loan terms.
If the loan obligation is joint and several, i.e. the lender could come after either of you for non-payment, I suppose the deduction belongs to whomever actually made the payments.
Bryan Whipple
Bryan R. R. Whipple, Attorney at Law
P O Box 318
Tomales, CA 94971-0318