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Bought house for my mother

Me and my wife are filling jointly. We have mortgage on our house and maxed out interest and SALT deductions. This year we bought another house under mortgage where my mother lives. She does not pay rent to us. Is there any opportunity for any other deductions with this transaction? Should i be reporting this purchase anyhow? What would be the most beneficial treatment of this property? Rental property?

 

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2 Replies

Bought house for my mother

You can treat the home as a second home and report interest on schedule A. However, since you are 'maxed out' on the interest deduction on your main home, this may cause your total interest deduction for both homes to be less than the interest deduction for the main home by itself. Depends on how large the average loan balance is and how little the amount of interest paid is on the second home is. Keep in mind both 1098's are sent to the IRS.

 

I don't know much about rentals but if you are not collecting rent and your mother is living in the second home, seems like a stretch to qualify it as a rental.

Bought house for my mother

You do not enter the "purchase" of a house on a tax return.   If you own a second home, you can enter mortgage interest, property tax and loan origination points for the second home.  But you say you are already "maxed out" with the interest and SALT on your primary home, so entering your second home will not help you.    If your mother is not paying rent, you cannot treat it as a rental property and deduct anything for it.  It sounds as if you are simply being kind and generous to your mom, which is not deductible.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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