My son & his wife is buying a house from his father-in-law. The father-in-law is still living with them. My son & wife has been making all the payments on the house/bills for a few years now. They even went and refinanced the house and added my daughter-in-law's name to the house. (She has better credit than my son.) This happened in 2021.
When doing my son's taxes, how do I do the mortgage section? I don't remember having to put the father-in-law's name is on his taxes before because his name is first on the 1098 and it's in his SS #.
I got to the part when they asked if this is a refinance of a previous loan. When they did the loan, it was a refinance of the previous loan.
Do I still put that this is a refi of a previous loan?
Do I put that everything they refinanced went to the house, because it did?
Thanks.
1. There is a big difference between mortgage interest from a mortgage company and a seller financed mortgage.
2. If your son and his wife did not have a previous loan for the house, this is not a refinance for them. If the father- in- law is involved, it was a refinance for him. The refinance question is to determine if points paid are deductible up front or must be spread over the life of the mortgage.
3. Yes, it all went to buy or build then select yes.
You're right. My son & wife took over the payments for the house, it was not paid for. The house was refinanced for a higher amount to cover the amount the father-in-law wanted for the house. So my son & wife are paying the mortgage and taxes. They are paying the mortgage directly to Wells Fargo, not to the father-in-law.
The mortgage is in the Father-in-law name & SS# than my daughter-in-law name. Then in a few years the father-in-law is going to deed my son to it. Something like that.
Great! Then the mortgage interest is correct from the bank and the father -in-law is not on the form. If they paid points, it might be hard to explain it was a new mortgage for them. They can choose new loan and take points or refi and spread any points out.