Form 1098 Mortgage Interest Deduction for a Deceased Taxpayer

[RS]

- My mother placed her Home in a Trust before she passed away, leaving my sister and I as the only Co-Trustees and my sister and I (along with our respective children) as Beneficiaries under the Trust.
- The Home is deeded in the name of the Trust.
- My mother took out a Home Equity Line of Credit ("HELOC") on the Home before she passed away, which still has an outstanding balance.
- I have been living in the Home (my sister lives out of state) ever since my my mother passed away.
- I have made all payments on the HELOC, property taxes, homeowner's insurance, utility bills, repairs, etc. since my mother passed away.
- Each year since my mother passed away, I have used the Form 1098 interest paid on the HELOC as a deduction against the Trust's taxes.
- The Form 1098s for the interest paid on the HELOC, including this year's Form 1098, indicates that my late mother (and not the Trust) is the borrower and lists her social security number.

QUESTION: Can I use the Form 1098 interest paid as a deduction against my PERSONAL taxes instead of as a deduction against the Trust's taxes?

[RichardK]

Yes, based on the information in your question it appears you meet all the requirements to deduct the home mortgage interest as an itemized deduction, click here for more information.

[Minions]

My father passed in April 2022. I’m on the deed but not the loan. I’m making all the payments. The 1098 is in his name. They won’t send one in my name unless the loan is in my name. Why can’t  I claim the mortgage interest on my personal tax return?

[DianeW777]

If this is your home and main residence you can deduct the mortgage interest because your home secures the loan and you inherited it from your father. In other words you now own the home.

Secured Debt

You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that:

• Makes your ownership in a qualified home security for payment of the debt;
• Provides, in case of default, that your home could satisfy the debt; and
• Is recorded or is otherwise perfected under any state or local law that applies.

In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. If you can't pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. In this publication, mortgage will refer to secured debt.

Key questions when entering this mortgage interest.

1. No uncommon situations apply
2. Enter the details of the 1098
3. The loan is secured by the property you own
4. It must be the primary or second home
5. Continue to finish the section

If you need more assistance please add specific details and one of our tax experts can help you.

@Minions