Home Equity Interest

[ms681]

My wifes mother passed away in 2019 and had a home equity loan on her house.  Our local bank froze the account so no other money could be taken out but let us continue to pay for it and kept the account in her mom's name  In 2020, at closing of probate the house was deeded to my wife and we continue to make monthly payments.  Since we are making the payments from our accounts and everything is in my wife's name can we claim the interest paid in 2020 on our taxes?

[Mike9241]

sorry for the loss. what is that house being used for?

[ms681]

Hi Mike,

Right now we have not done anything with the house but donated all her clothes, personal items, and some furniture to local donation center.  The house is classified as our 2nd home since we already have a primary residence and we have paid the taxes on the house.  We are trying to decide if we let one of our kids move in just to have activity there but not classify it as a rental property.

[DMarkM1]

Yes, your wife should get a Form 1098 from the mortgage company.  You would use that form to enter the mortgage as a second home.  Here is an IRS link on the subject for more information. 

[ms681]

Thanks for your help.