We moved to Montana 2 years ago and my mother bought a house in her name for us to live in as long as we pay the monthly payment which includes everything. So everything is in her name and she lives in Oregon..my question is since we make the monthly mortgage payment and have proof that we do so are we able to claim the deduction? Our names are not on the deed or mortgage loan.
this is from the article bath4477 cited
In a recent Tax Court Summary Opinion, it has been decided that a taxpayer can claim home interest deductions for making payments on a mortgage even though the mortgage was not legally owed by the taxpayer. In order for the taxpayer to claim the home interest deduction, there has to be an oral agreement granting the taxpayer an interest in the home in return for paying the mortgage and property expenses, along with the taxpayers’ name ultimately being added to the legal title. This will result in the taxpayer becoming an equitable owner of the property.
so unless you have meet the above, I would say no deduction. if audited expect the IRS too challenge any oral agreement.
this is a more detailed explanation read it carefully.
in this recent Tax Court case, John Wainwright, an aerospace professional and veteran of the US Air Force, has been friends with the homeowner for more than 35 years. The friend had purchased a home in Bethesda, MD, for $95,000. In 2006, Wainwright and his friend refinanced the Bethesda home as co-owners in order to make certain renovations.
During the tax years in question – 2010 and 2011 – Wainwright resided in the Bethesda home. He paid the mortgage and maintained the property both of those years. But the IRS disallowed the mortgage interest deduction he claimed on both years’ tax returns.
To meet the tax law requirements, the mortgage must be the obligation of the taxpayer claiming the deduction, not the obligation of another. However, if a taxpayer is found to be an “equitable owner,” taking state law into account, he or she may be entitled to a mortgage interest deduction. A taxpayer becomes the equitable owner of property by assuming the benefits and burdens of ownership.
In making the determination for this particular case, the Tax Court considered several key factors, including whether Wainwright:
• Had the right to possess the property and to enjoy the use, rents, and profits.
• Had the duty to maintain the property.
• Was responsible for insuring the property.
• Bore the risk of loss of the property.
• Was obligated to pay taxes, assessments, and charges against the property.
• Had the right to improve the property.
• Had the right to obtain legal title to the property at any time by paying the balance of the purchase price.
Based on these factors, the Tax Court concluded that Wainwright was the equitable owner of the home. Therefore, he was entitled to deduct the mortgage interest paid during the tax years in question