There are no direct tax consequences from paying off a mortgage - the only impact is that after the mortgage is paid off, there is no more mortgage interest deduction available as an itemized deduction on Schedule A, so your tax liability may be slightly higher than it would have been if you still were paying mortgage interest.
There are no direct tax consequences from paying off a mortgage - the only impact is that after the mortgage is paid off, there is no more mortgage interest deduction available as an itemized deduction on Schedule A, so your tax liability may be slightly higher than it would have been if you still were paying mortgage interest.
The money your sister pays is essentially a gift to you, which is not taxable to you. Nor is it deductible by her.
Her paying off your mortgage amounts to a gift from her to you. Gifts are not taxable, or reportable, to the person receiving the gift (you) or deductible by the person giving the gift. So, it doesn't matter whether she pays the mortgage directly or gives the money to you to pay it. Any part of the payment that goes to paying interest is deductible to you.
If the gift is more than $14,000, the giver is required to file a Gift tax return (form 709). The gift tax filing is separate from income tax. "Gift Tax" is somewhat of a misnomer. Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See <a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html">https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html</a>