if I take out a mortgage to buy a home and my daughter pays the mortgage do I have ot claim the money on taxes
Home Mortgage
meme asked:
The loan and home will stay in my name but she will pay part of the payment until she gets on her feet and can pay all the payment. Do I have to claim these partial payments as income on my taxes? If I must claim the income can I claim a loss since the payments will not cover the loan?
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The loan and home will stay in my name but she will pay part of the payment until she gets on her feet and can pay all the payment. Do I have to claim these partial payments as income on my taxes? If I must claim the income can I claim a loss since the payments will not cover the loan?
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February 25th, 2009 at 10:56 am
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Ask an accountant — it really depends on if the house was purchased as investment property or whether or not it’s a primary residence.
February 28th, 2009 at 7:15 am
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sounds like a personal loan from your daughter to you, the government dont need to know bout that…………..
March 2nd, 2009 at 4:22 pm
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Yes. Her payment to you would be classified as rental income and then you can deduct the expenses of the house such as interest and property taxs so you wold likely have a loss for taxs at the end of the year.
To get a complete answer you need to be asking this to your acountant because it also depends on the state and city you live in, is this also your primary residence, and what other income you have and what types of income that is.
March 3rd, 2009 at 4:53 am
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As far as the IRS is concerned, this is your home. You are simply allowing your daugher to live in it. Most likely they would consider any money that she pays you to be rent. If she’s paying you less than market rent you’ll be limited to any expenses that you can claim to no more than the rent collected. You could offset what she pays you with the mortgage interest, property taxes, repairs & maintenance, insurance, depreciation, etc. but as noted if she’s paying less than market rent you can’t use any loss to offset other income.
Once she’s able to swing the entire payment there are a couple ways that you could proceed. You could sell her the home and take back a “wrap” mortgage. This can get messy at tax time, however. It would be best if she could qualify for a mortgage in her own right and you’d then sell it to her outright. There are tax consequences with that as well, since it was an investment property as far as the IRS is concerned so any gain will be fully taxable AND you’ll have to recapture the depreciation allowed or allowable while she was renting the home from you, even though you probably were limited from claiming it due to the fair market rent rules.
March 6th, 2009 at 4:29 am
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Unless you have a primary residence elsewhere, it’s still your house, your mortgage interest deduction and why should the IRS know about any arrangements you have with your daughter if both of you are happy with this arrangement.
Her paying the mortgage voluntarily does not constitute paying rent to you - that’s not income.
Your daughter could assume the mortgage if she’s eligible although the terms may be substantially different than yours.