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DanaRenee
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Member since 6/06 6470 total posts
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Dana
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legal ? re: family member taking over mortgage
Ok heres the scenario:
Jack owns his condo & has a mortgage on it
Jack moves out and Jill, Jacks sister, moves in.
Jill pays the mortgage that is in Jacks name.
Jill deducts the mortgage interest she paid even though the 1098 comes in with Jacks social security number.
Legal, illegal, other thoughts???
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Posted 7/14/08 7:59 PM  |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
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Beth
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Re: legal ? re: family member taking over mortgage
DH saids illegal - even though it would most likely never be questioned
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| Posted 7/14/08 8:15 PM |
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jerrysgirl
I love my hot dog!!
Member since 6/06 5357 total posts
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E & J
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Re: legal ? re: family member taking over mortgage
illegal. the person whose social security it is should be reported. if they person e-files her tax return it might comne up as being an issue.
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| Posted 7/14/08 8:37 PM |
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suvenR
designer mutt
Member since 5/05 4239 total posts
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Re: legal ? re: family member taking over mortgage
Definitely not legal for her to take that deduction.
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| Posted 7/14/08 9:13 PM |
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Mrs-D-Girl
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Re: legal ? re: family member taking over mortgage
Posted by suvenR
Definitely not legal for her to take that deduction.
I agree it goes by the person who is on the mrtg and legally they are the only one entitled to the right off.
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| Posted 7/14/08 10:03 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
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Beth
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Re: legal ? re: family member taking over mortgage
how does Jack feel about Jill taking his deduction?
did he take it also?
that could be a problem
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| Posted 7/14/08 10:21 PM |
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igottabeme
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Wouldnt you like to know! ;)
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Re: legal ? re: family member taking over mortgage
Posted by Beth1210
how does Jack feel about Jill taking his deduction?
did he take it also?
that could be a problem
my thoughts exactly. if they both took the deduction then they're gonna be in some trouble.
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| Posted 7/14/08 10:56 PM |
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TJLealand3
LIF Adolescent
Member since 6/07 839 total posts
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Thomas
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Re: legal ? re: family member taking over mortgage
Everything that is sent to a taxpayer is also sent to the government. When Jack doesn't file his interest, Uncle Sam questions his return, when Jill claims interest which was not reported to the Government, Uncle Sam questions her return.
Sounds like a real Audit red flag to me....
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| Posted 7/15/08 8:00 AM |
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MikesWife
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Karen
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Re: legal ? re: family member taking over mortgage
Are you sure there wasn't an assumption of the mortgage?
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| Posted 7/15/08 10:12 AM |
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Kara
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Re: legal ? re: family member taking over mortgage
Posted by TJLealand3
Everything that is sent to a taxpayer is also sent to the government. When Jack doesn't file his interest, Uncle Sam questions his return, when Jill claims interest which was not reported to the Government, Uncle Sam questions her return.
Sounds like a real Audit red flag to me....
NOT an accountant or a tax lawyer... Honest question here:
In order for Jack to claim the deduction, wouldn't he also have to report the same amount as income? HE didn't pay the interest, so it's not his deduction to take, unless he also reports that same amount as income from his sister who paid it on his behalf, no?
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| Posted 7/15/08 10:48 AM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
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Beth
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Re: legal ? re: family member taking over mortgage
Posted by Kara
Posted by TJLealand3
Everything that is sent to a taxpayer is also sent to the government. When Jack doesn't file his interest, Uncle Sam questions his return, when Jill claims interest which was not reported to the Government, Uncle Sam questions her return.
Sounds like a real Audit red flag to me....
NOT an accountant or a tax lawyer... Honest question here:
In order for Jack to claim the deduction, wouldn't he also have to report the same amount as income? HE didn't pay the interest, so it's not his deduction to take, unless he also reports that same amount as income from his sister who paid it on his behalf, no?
in theory- yes Jill paid the interest
but - I am sure I am paying part of my Landlords mortgage - as well as the other people the rent (4 family house)
I am sure my LL deducted the interest from her taxes
Jake and I did not
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| Posted 7/15/08 10:51 AM |
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Kara
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Re: legal ? re: family member taking over mortgage
Posted by Beth1210
Posted by Kara
Posted by TJLealand3
Everything that is sent to a taxpayer is also sent to the government. When Jack doesn't file his interest, Uncle Sam questions his return, when Jill claims interest which was not reported to the Government, Uncle Sam questions her return.
Sounds like a real Audit red flag to me....
NOT an accountant or a tax lawyer... Honest question here:
In order for Jack to claim the deduction, wouldn't he also have to report the same amount as income? HE didn't pay the interest, so it's not his deduction to take, unless he also reports that same amount as income from his sister who paid it on his behalf, no?
in theory- yes Jill paid the interest
but - I am sure I am paying part of my Landlords mortgage - as well as the other people the rent (4 family house)
I am sure my LL deducted the interest from her taxes
Jake and I did not
Your LL is also obligated to count your rent as income.
I'm NOT saying Jane can take the deduction -- If the mortgage isn't in her name, she cannot. However, I am saying that I don't think Jack can take the deduction without claiming income for the money that paid the interest, since he didn't pay it.
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| Posted 7/15/08 10:55 AM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
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Beth
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Re: legal ? re: family member taking over mortgage
Your LL is also obligated to count your rent as income.
I'm NOT saying Jane can take the deduction -- If the mortgage isn't in her name, she cannot. However, I am saying that I don't think Jack can take the deduction without claiming income for the money that paid the interest, since he didn't pay it.
I am sure my LL counts the rent as income- but I know she has a mortgage on the house- I was just saying- that I as a renter- same as Jill -don't take the interest deduction on my taxes
However I bet Jack got this mortgage rate as an "owner occupied" loan- with a lower rate then he would have gotten if he was an investor
so there is alot going on here - I wouldn't want to be Jack or Jill when the IRS figures this one out
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| Posted 7/15/08 11:24 AM |
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Ophelia
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remember, when Gulliver traveled....
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Re: legal ? re: family member taking over mortgage
this is according to my dh, who IS a tax accountant
it's not illegal...it can be done..as long as jack does not deduct that portion that Jill is going to deduct...the IRS gets all green and Hulk-like when you do stuff like that. LOL
If Jill has checks to support what she's been paying, she should have no problem
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| Posted 7/15/08 11:25 AM |
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DanaRenee
Fitness Junkie!
Member since 6/06 6470 total posts
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Dana
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Re: legal ? re: family member taking over mortgage
Posted by Ophelia
this is according to my dh, who IS a tax accountant
it's not illegal...it can be done..as long as jack does not deduct that portion that Jill is going to deduct...the IRS gets all green and Hulk-like when you do stuff like that. LOL
If Jill has checks to support what she's been paying, she should have no problem
This is what i'm thinking. See, on the 1098 instructions it seems to imply that if the payer {of the interest} on record (jack) was not the one who paid the interest, attach a note to the actual payers (Jills) return w/the social security number of the person who is on record (Jack). I'm not sure it matters that Jack owns the condo and the mortage. Jack is not collecting $$ or making $$ on Jill and they do not have any sort of lease in place. Jack simply is letting Jill live there...yet owning it himself.
Message edited 7/15/2008 11:57:40 AM.
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| Posted 7/15/08 11:57 AM |
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DanaRenee
Fitness Junkie!
Member since 6/06 6470 total posts
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Dana
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Re: legal ? re: family member taking over mortgage
Posted by Beth1210
how does Jack feel about Jill taking his deduction?
did he take it also?
that could be a problem
Jill is deducting whatever she is paying..and no, they're not double dipping (hes not taking any deduction)
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| Posted 7/15/08 11:59 AM |
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DanaRenee
Fitness Junkie!
Member since 6/06 6470 total posts
Name:
Dana
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Re: legal ? re: family member taking over mortgage
Posted by TJLealand3
Everything that is sent to a taxpayer is also sent to the government. When Jack doesn't file his interest, Uncle Sam questions his return, when Jill claims interest which was not reported to the Government, Uncle Sam questions her return.
Sounds like a real Audit red flag to me....
wrong. there could be multiple borrowers on a mortgage yet only 1 social securty number on the 1098...and in that case the multiple borrowers would split the interest deduction. The IRS would never know the difference.
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| Posted 7/15/08 12:00 PM |
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DanaRenee
Fitness Junkie!
Member since 6/06 6470 total posts
Name:
Dana
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Re: legal ? re: family member taking over mortgage
Posted by MikesWife
Are you sure there wasn't an assumption of the mortgage?
Yes this is an actual family scenario
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| Posted 7/15/08 12:01 PM |
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DanaRenee
Fitness Junkie!
Member since 6/06 6470 total posts
Name:
Dana
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Re: legal ? re: family member taking over mortgage
Posted by Kara
Posted by TJLealand3
Everything that is sent to a taxpayer is also sent to the government. When Jack doesn't file his interest, Uncle Sam questions his return, when Jill claims interest which was not reported to the Government, Uncle Sam questions her return.
Sounds like a real Audit red flag to me....
NOT an accountant or a tax lawyer... Honest question here:
In order for Jack to claim the deduction, wouldn't he also have to report the same amount as income? HE didn't pay the interest, so it's not his deduction to take, unless he also reports that same amount as income from his sister who paid it on his behalf, no?
Jack is not claiming the deduction!!! Jill is, as per my original post.
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| Posted 7/15/08 12:02 PM |
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Kara
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They call me "Tater Salad"
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Re: legal ? re: family member taking over mortgage
Posted by DanaRenee
Posted by Kara
Posted by TJLealand3
Everything that is sent to a taxpayer is also sent to the government. When Jack doesn't file his interest, Uncle Sam questions his return, when Jill claims interest which was not reported to the Government, Uncle Sam questions her return.
Sounds like a real Audit red flag to me....
NOT an accountant or a tax lawyer... Honest question here:
In order for Jack to claim the deduction, wouldn't he also have to report the same amount as income? HE didn't pay the interest, so it's not his deduction to take, unless he also reports that same amount as income from his sister who paid it on his behalf, no?
Jack is not claiming the deduction!!! Jill is, as per my original post.
No one said he was. I understood your original post just fine. I was asking a follow-up question stemming from other responses you received.
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| Posted 7/15/08 12:30 PM |
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