Hello sh62365:
Thank you for your additional comments and questions.
Although it may be a year late, you should still go ahead and File Form 709. It is highly unlikely that the IRS will assess any penalty for a late filing.
To the extent that either one of you pays more than half of the cost of the joint tenancy property costs each year, including both mortgage interest and property taxes (less a $14,000 annual allowance amount, as explained in my original answer), then under the estate and gift tax rules, a "deemed gift" is considered to have been made . . . and thus the need for filing Form 709 is once again invoked. In other words, if this arrangement turns out to be a yearly practice, you technically will need a new Form 709 each year.
Finally, when a property is jointly owned by more than one individual, the following rules apply:
• For unmarried couples and individuals, each taxpayer can only claim the portion of any expenses, such as mortgage interest or real estate taxes, that they actually paid
• For a married couple filing separate returns, they can chose to allocate real estate taxes and mortgage interest expenses between themselves, in any manner they choose.
Thus, in your case of joint property ownership with your sibling, the deductions for mortgage interest and property taxes rest with the one of you who actually writes the checks for these items . . . even if the money used to pay those costs was "gifted" to one or the other sibling.
Thanks again.
