@susie1162 wrote:
The mortgage is in my daughter-in-law's name. She's been paying the mortgage to date. Her name, my name and my son's name are all on the title/deed of the house. If I started paying the mortgage on the house, even thought it's not in my name, can I take the tax deduction on the mortgage interest? The home is not my permanent residence. I live in another state.
If you make the payments directly, it would be dodgy to claim them as a gift and have your daughter deduct them. There are rare situations where the IRS says it is acceptable to treat paying someone else's bills as a gift, but most of the time, a taxpayer can only deduct payments they make themselves.
To avoid problems down the road, if you wanted to treat the payments as a gift to your daughter-in-law with your son and daughter in law making the payments and continuing to claim the deduction, you would need to send money (checks, electronically) to them and have them pay the mortgage. A gift tax return would be required if the amount of the gift is more than $15,000 per person per year. However, you can give up to $15,000 to your son and another $15,000 to your daughter in law without triggering the requirement. (And gift tax itself is not owed unless your lifetime gifts are more than $11 million. Large gifts must be reported to track them against that limit.)
If you make the payments directly, you can deduct the interest as you are an owner of the property, even though the mortgage is not in your name, as long as you treat the home as your second home. The IRS just says "A second home is a home that you choose to treat as your second home." There is no specific requirement to live there. (You may see other sources saying you must live there at least 14 days. This is true if the home is rented the rest of the year; it is not necessary in the case where other family members are living there full time.)
Assuming the property taxes are paid from an escrow account that is funded from the monthly mortgage payments, you can deduct the property taxes even if the home is not your second home. You can deduct property taxes on any property you own, even if you don't live there. But, you may run up against the $10,000 cap on deducting state and local income and property taxes, if you also deduct your own state income and property taxes.
It may be relevant to ask why this arrangement is now necessary and what you are trying to accomplish.
