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trexbecky
New Member

Transferred property from parents into a trust with myself as the Grantor. Who is able to deduct the Mortgage interest paid in 2020? Parents made payments.

 
6 Replies
HelenC12
Expert Alumni

Transferred property from parents into a trust with myself as the Grantor. Who is able to deduct the Mortgage interest paid in 2020? Parents made payments.

Whoever is legally obligated to pay the debt and made the payments. If you are not on the mortgage and you don't pay mortgage interest, you can't take the deduction. Your parents can take the deduction.

 

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trexbecky
New Member

Transferred property from parents into a trust with myself as the Grantor. Who is able to deduct the Mortgage interest paid in 2020? Parents made payments.

The mortgage is also in the name of the trust as is the tax document from the bank.

Irene2805
Expert Alumni

Transferred property from parents into a trust with myself as the Grantor. Who is able to deduct the Mortgage interest paid in 2020? Parents made payments.

Then it would be the trust who takes the deduction for mortgage interest on their 1041 return.

trexbecky
New Member

Transferred property from parents into a trust with myself as the Grantor. Who is able to deduct the Mortgage interest paid in 2020? Parents made payments.

So does the trust have to file a tax return separately or does it go on my tax return because I am the grantor?

Irene2805
Expert Alumni

Transferred property from parents into a trust with myself as the Grantor. Who is able to deduct the Mortgage interest paid in 2020? Parents made payments.

Trusts must file a Form 1041, U.S. Income Tax Return for Estates and Trusts, for each taxable year where the trust has $600 in income or the trust has a non-resident alien as a beneficiary.

 

If you need to file a return for the trust you will need TurboTax Business.  You can visit the following link to purchase TurboTax Business for 2020: TurboTax Business

 

 

tagteam
Level 15

Transferred property from parents into a trust with myself as the Grantor. Who is able to deduct the Mortgage interest paid in 2020? Parents made payments.


@trexbecky wrote:

So does the trust have to file a tax return separately or does it go on my tax return because I am the grantor?


Grantor trusts can typically use an optional method of filing rather than filing a 1041.

 

See https://www.irs.gov/instructions/i1041#idm140366310230464

 

NOTE: Also, for future reference, in order to deduct mortgage interest, a taxpayer must actually pay the interest and the taxpayer must at least be named on the deed (i.e., it is not necessary that the taxpayer who pays the mortgage interest be named or otherwise obligated on the note).

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