We have purchased a house for our mother to live in. Mortgage and everything is in our name. She pays the mtg and everything. Do I need to list this as rental property and claim her payments as income? Or can we not file/claim anything on this house? Or can we just claim this as a second house. When we begin to make all the payments on the house, with her living there, how would I claim this house?
snipped-for-privacy@hotmail.com asked:
If your mother is paying the "mtg and everything" ... then it would seem that you have really only provided the down payment -- as a gift -- and your mother is actually paying the costs of maintaining the home. So you can't even declare she is your dependent, at this time. If you intend to claim this "as a second house," when would you begin to make the payments "with her living there"? If you were to do so immediately, then you would have a straightforward claim that this was a home you were providing for your mother, and claim her as a dependent. In that circumstance, it would be proper to deduct the mortgage interest on your Schedule A, presumably along with the interest payments for your main home. (You could think of it as if you had added a "mother-in-law" suite -- except at a different address.) Your mixture of intentions doesn't make it possible to give a clearcut answer. Certainly, if you intended this to be a rental property, your mother would have to sign a lease and her payments would be made to you -- and should be equivalent to market rates for similar properties. You would then make the mortgage payments. (If you choose to do that, please seek professional help.) Bill
No, since it's not a money making venture. You and your brother are just helping your mother out.
No, since you're not actually paying these items.
No, because y'all don't live there.
At that time, IF you're charging her a fair rental value, then consult a local tax pro to determine the situation at that time. Y'all ARE however doing the right thing.
ChEAr$, Harlan Lunsford, EA n LA Wed 9 Mar 2005
I don't see where you have any rental income. You state that your mother is making the interest and tax payments. I assume she is paying those directly. I.e., she is not paying you and you are making the payments. No tax deduction for her (she is not the owner and I assume not liable for the loan) and no tax deduction for you as you did not make any tax deductible payments. You can certainly let her live there rent free. If you make the mortgage and tax payments you would get a tax deduction for the property taxes paid and the qualified mortgage interest paid. You can also opt to set this up as a rental and start charging her a fair rental value. That puts you on a Schedule E where you may take the above mentioned deductions as well as other items of expense.
But in a very, very wrong way.
Stu
Actually, the OP said mother is paying the mortgage, which includes one presumes some portion of principal repayment. Therefore there is some remuneration to the owners. But they do not need to declare it as 'rent', and yes they are doing the right thing!
In reply to A. G. Kalman - My mother does pay me the money in cash. She gives us the cash to cover the mtg and utilites and then I make out the checks for the payments. We like to complicate things.
naturally I was commenting on the childrens' love and affection for a parent and the desire to take care of her as she once took care of them. Although we do not know the "rest of the story", just perhaps mother couldn't qualify for a mortgage, but can manage to make the payments out of her social security. But then, we don't really know.
ChEAr$, Harlan Lunsford, EA n LA Sun 13 Mar 2005
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