Bought a house with/for daughter can she claim Mortgage Interest?

Options
Timrxnj
Timrxnj Member Posts: 1 Newcomer

My daughter bought a house but I had to finance it. She has always paid 100% of the monthly mortgage and taxes and bills. But… Through paying me to pay the mortgage. For the first 3 years she was not on the DEED, but now she is on the deed and a co-owner. Being this is a second house for me and not occupied by me. The Mortgage interest does not help me using the standard deduction. The mortgage is in my name at the bank.

Can I apply the Interest to her 1040? And Taxes if they do not affect my 1040?

Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 109
    Options

    Hi Timrxnj,

    For the mortgage interest part of your question, the quick answer is no. For the (property) taxes question, the answer is maybe.

    Mortgage interest you are paying for the house would be deductible on your tax return because the mortgage is under your name and SSN, so no interest can be claimed on your daughter's tax return. Your arrangement with your daughter on how she pays you and then you pay the lender is between the two of you. For income tax purposes, you are the only one allowed to claim the mortgage interest as an itemized deduction, and it doesn't sound like that helps since you are claiming the standard deduction so the benefit is lost.

    For property taxes, it may be a similar situation. Although her name is now added to the deed, does your mortgage payment include property taxes? Many people choose to have their property taxes paid this way and it's handled in an escrow account by the lender. If that's the case, your lender may or may not include the property taxes on Form 1098 (Mortgage Interest Statement) Box 10, meaning again it is being reported under your name and SSN.

    If however, the property taxes are not included in the mortgage payment and those are handled separately with the county where the house is located, and your daughter is paying some of the property tax, she could claim property taxes she pays as an itemized deduction on a tax return because she is co-owner/listed on the deed. Any property tax claimed on her tax return would need to be carefully documented should the IRS ask for proof of payment. Paying you and then you pay the county is not the same as your daughter paying the county directly.