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Level 1

Can I claim mortgage interest deduction if my name is not on the mortgage or deed but I paid all the payments and live at the house with my brother. We are 50/50 owners

We originally bought the house together and both our names were on the mortgage and deed.  However, after refinancing we took my name off the mortgage and deed in case I wanted to buy another home. That never happened.  We have always lived at the same house.  The last two years I've paid the mortgage payments.  However, since my name is not on the deed or mortgage can I claim the mortgage interest deduction? We consider ourselves 50/50 owners even though my name isn't on the deed or mortgage.

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Level 20

Can I claim mortgage interest deduction if my name is not on the mortgage or deed but I paid all the payments and live at the house with my brother. We are 50/50 owners

The short answer is no. You must pay the mortgage and be an owner of the property.

There is a doctrine called constructive ownership where someone who does not own in name, can be treated as an owner.  You would have to take the deduction, get audited, and then go to tax court and argue your case.  The rulings I have read go both ways and depend on the exact facts in each case.

The case I remember best is a man, who was a recent immigrant, whose brother bought him a house since he did not have a credit rating.  The man lived in the home, performed all work, paid all the bills, and acted as the owner in every significant way, with the plan of refinancing in his name as soon as he could.  The IRS denied the deduction but the tax court ruled in favor.  Another case involved a man who moved in with his elderly father and began paying all the bills.  Since the man expected to inherit the house, and meanwhile was acting in every way like the responsible owner (paying all bills, etc.) the IRS denied but the tax court allowed.

However in other cases the tax court has ruled against the taxpayer.  It is specific to every circumstance.

Here your argument could be weakened by taking the home out of your name in preparation of moving out.

But in any case, taking the mortgage interest deduction means risking an audit and a trip to tax court to argue your case.  The black letter rules say you can't.

5 Replies
Level 20

Can I claim mortgage interest deduction if my name is not on the mortgage or deed but I paid all the payments and live at the house with my brother. We are 50/50 owners

From a legal standpoint, you are not an owner. This could negatively impact you if your brother dies before you do. Please see a lawyer.
Level 20

Can I claim mortgage interest deduction if my name is not on the mortgage or deed but I paid all the payments and live at the house with my brother. We are 50/50 owners

The short answer is no. You must pay the mortgage and be an owner of the property.

There is a doctrine called constructive ownership where someone who does not own in name, can be treated as an owner.  You would have to take the deduction, get audited, and then go to tax court and argue your case.  The rulings I have read go both ways and depend on the exact facts in each case.

The case I remember best is a man, who was a recent immigrant, whose brother bought him a house since he did not have a credit rating.  The man lived in the home, performed all work, paid all the bills, and acted as the owner in every significant way, with the plan of refinancing in his name as soon as he could.  The IRS denied the deduction but the tax court ruled in favor.  Another case involved a man who moved in with his elderly father and began paying all the bills.  Since the man expected to inherit the house, and meanwhile was acting in every way like the responsible owner (paying all bills, etc.) the IRS denied but the tax court allowed.

However in other cases the tax court has ruled against the taxpayer.  It is specific to every circumstance.

Here your argument could be weakened by taking the home out of your name in preparation of moving out.

But in any case, taking the mortgage interest deduction means risking an audit and a trip to tax court to argue your case.  The black letter rules say you can't.

Level 20

Can I claim mortgage interest deduction if my name is not on the mortgage or deed but I paid all the payments and live at the house with my brother. We are 50/50 owners

However, the owner can deduct the mortgage interest even though you pay it, if you treat the mortgage payments as a gift from you to that person.  That would allow someone to get the benefit.
Level 12

Can I claim mortgage interest deduction if my name is not on the mortgage or deed but I paid all the payments and live at the house with my brother. We are 50/50 owners

I have not read the Court Cases, but I definitely lean towards "yes", you can claim the interest as an "equitable" owner.
<a rel="nofollow" target="_blank" href="https://www.law.cornell.edu/cfr/text/26/1.163-1#b">https://www.law.cornell.edu/cfr/text/26/1.163-1#b...>

However, as Opus mentioned, it can be challenging to prove yourself an "equitable" owner, and without a 1098 from the mortgage company, the IRS is almost positively going to question it.
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Level 11

Can I claim mortgage interest deduction if my name is not on the mortgage or deed but I paid all the payments and live at the house with my brother. We are 50/50 owners

You did not just refinance the house.  Your brother essentially bought you out of your half.  You don't own any part of the house now.