@shounshell wrote:
I am wondering you can point me to the publication regarding this?
IRS regulation 1.163-1(b) says,
"Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness."
https://www.law.cornell.edu/cfr/text/26/1.163-1
Publication 963 does not include this situation -- the publications are often written more narrowly to apply to the broadest possible audience.
You can deduct mortgage interest you pay, if you are the legal or equitable owner, even if you are not obligated on the loan documents. Proving you are an equitable owner is the tricky part.
And an equitable owner can't deduct property taxes, because the law is written in such a way that it allows the possibility of equitable owners for the mortgage interest deduction but only allows legal owners in the property tax section.
