If your name is on mortgage, you take the tax deduction

Your Money

October 11, 1992|By Los Angeles Times

C Q: Earlier this year, my daughter and her husband joined with me to purchase a home in which we all live. We hold title as joint tenants. I am the 55 percent owner of the home; they own 45 percent. We share all expenses based on the ownership ratio. However, because I provided the money for the entire down payment, I would like to take the entire tax deduction for the first year's interest and property taxes. After that, we would split the deduction 55 percent-45 percent. Is this possible? J.L.

A: The operable question here is: Whose names are on the mortgage?

If all three of your names are on the mortgage, then the mortgage interest and property tax deduction must be split according to who paid what share of those expenses. If the bills were split 55 percent-45 percent, then that is how the deduction must be split. You cannot decide to take the entire deduction just because you provided the money for the down payment or because you need the deduction more for your income taxes. However, if you did make all the mortgage and property tax payments, you would be entitled to the entire tax deduction.

If the names of your daughter and son-in-law are not on the mortgage, then you must take the entire mortgage interest and property tax deduction -- this year and every year thereafter. Is this true even if your daughter and son-in-law are making their share of those payments? Yes, say our experts. The issue centers on whose responsibility those payments are. If only your name is on the mortgage document, then those payments are considered your sole responsibility. Even if your daughter and son-in-law are making their share of the payments, their contribution is considered a gift to you -- not a tax-deductible payment.

Carla Lazzareschi cannot answer mail individually but will respond in this column to financial questions of general interest. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.

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