Can my father, who took out an LMA loan for me to purchase a home claim the interest?

[ckaribs84]

My father took out an LMA loan for me to purchase a home. It is not his residency, it is mine. The loan is under his name. My name is on deed, I have paid the interest on this loan. Will he be able to claim the interest or can I claim it?

[SweetieJean]

Do you mean a Loan Management Account that is a secured line of credit that uses securities, such as stocks and bonds, as collateral? Or is the loan secured by the home itself?

[SweetieJean]

If the the loan isn’t backed by the house, no one gets a mortgage interest deduction.

[Opus 17]

To be deductible as mortgage interest, 

1. the borrower must own the home

2. the borrower must pay the interest

3. the loan must be secured by the home -- in real estate terms, it must be "perfected", usually by recording as a lien against the property with the county clerk so that the home itself is at risk of foreclosure if there was a problem with the payments.

Your arrangement fails at least 2 of these conditions, so neither of you can deduct the interest.

[SweetieJean]

And this sounds like a Margin Loan to me, which is risky, since it can be called to cover shortfalls in the securities.