Can I and should I amend our taxes?

[Cheilman]

We paid over $10k in interest when we purchased our home from a family member.  should I amend? I didn’t claim because I never received an official tax form from the bank just a settlement.

[NCperson]

@Cheilman - the prorated interest on the settlement is NEVER on the tax form received from the mortgage servicer.  You can certainly deduct the interest listed on the settlement statement, subject to any rules related to mortgages over $750,000 ( how big was this mortgage - $10,000 is a lot for a partial month). 

[fanfare]

did your family member finance your purchase and now you are paying them interest?

that's deductible. BUT you must be able to itemize and end up with more than the standard deduction.

@Cheilman 

[Cheilman]

It was from a family member who was behind on an interest o my loan 7 months. @NCperson @fanfare 

[Cheilman]

It was from a family member who was behind on an interest o my loan 7 months. 

[Cheilman]

No we purchased from them they had an IO and were 7 months behind. 

[NCperson]

@Cheilman = well that is a little different.... you were paying off THEIR mortgage that was 7 months behind? that's the $10,000? 

Then you can't deduct that interest because it wasn't interest related to a mortgage collaterlarized by your personal residence.......

[Cheilman]

We were living there and still are but now the mortgage is ours not theirs. We were renting from them and they didn’t make the payments. So when we purchased the home we had to calculate that into the sales price @NCperson 

[NCperson]

@Cheilman - please see 

https://www.irs.gov/pub/irs-pdf/p530.pdf

and specifically the right bottom of page 11 and continuing onto page 12: 

Items added to basis. You can include in your basis the settlement fees and closing costs you paid for buying your home. A fee is for buying the home if you would have had to pay it even if you paid cash for the home. 
The following are some of the settlement fees and closing costs that you can include in the original basis of your home.
• Abstract fees (abstract of title fees).
• Charges for installing utility services.
• Legal fees (including fees for the title
search and preparation of the sales contract and deed).
• Recording fees.
• Surveys.
• Transfer or stamp taxes.
• Owner's title insurance.

• Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions.

the interest can be added to the cost basis, but it is not deductible.