Mortgage Interest

[Dwatchmen]

My mother died Jan 2021 and the mortgage was in her name.  I paid on the mortgage for the rest of the yr.  I received a 1098 for her, but can I report the mortgage interest as a deduction on my taxes?

[Bsch4477]

If you pay the mortgage on your parents' house, you can't simply claim the applicable interest payments as a deduction. The IRS assumes that any funds used in this manner are intended for use as "gifts." Unfortunately, gifts are neither taxable nor tax-deductible under current federal law.

But if you inherited the home and assumed the mortgage you could deduct it. 

[DMarkM1]

It depends.  You can split the interest deduction if you are on the loan or on the deed.  The executor of your mother's estate should be filing her final return using the form 1098 as well.  The total interest claimed by the joint owners cannot exceed the interest reported on the form 1098.  

In the "Mortgage Interest" topic you will have couple of applicable selections, like "someone co-owns and you only pay a portion",  "your social security number is not on the 1098,"  enter your mother's information (name/address/etc), and enter your portion of the 1098 amounts.

[Opus 17]

What should have happened is that you paid the mortgage from her estate.  And if the estate had no money and all she had was the house, you should have called the bank and suspended the mortgage until the home was transferred to you or was sold.

There is a tax rule called "constructive ownership."  You might have a constructive ownership interest in the home if you lived there with your mom and paid all the bills, did the maintenance and upkeep, and so on.  You might also have a constructive ownership interest if you had a reasonable expectation of inheriting the home and becoming the actual legal owner, so by paying the mortgage, you were keeping up your own financial interests. There is no single test for constructive ownership, it depends on the facts and circumstances of each case.

If you believe you had a constructive ownership interest in the home, you can deduct mortgage interest and property taxes you paid as if you owned the home.  However, because your SSN is not on the 1098, you may get a letter from the IRS asking for more information, and it will be up to the examiner who reads your letter, whether or not to accept your claim of constructive ownership interest.