My dad passed away this year and he had a loan out on a cabin. I will be paying off the cabin with some of his life insurance money but the cabin's title is in a trust with his siblings, so I won't be the owner. Do I need to include this loan payment when I file my taxes next year? And not exactly tax related, but where does the title for the cabin go once the loan is paid off (my dad has five siblings, all whose name is on the trust)?
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Hello!
First, my condolences on the loss of your father.
If you are legally obligated to pay the debt, you can claim a deduction for the mortgage interest paid on your father's loan if you qualify to itemize your deductions. Here is a link to our support site with detailed information on What Are Itemized Deductions?
Your question on handling of the deed is outside the scope of this forum, apologies.
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Elizabeth W., EA
Thank you for your reply!
What does "legally obligated" mean? I am his beneficiary but I'm not actually listed on the loan, so would that mean I'm not obligated to pay it?
Legally obligated means you have a duty to pay the mortgage and the mortgage company can take action against you individually if the mortgage isn't paid.
Your question about being obligated in your capacity as beneficiary is a legal issue that I can't address in this tax forum ... apologies.
Elizabeth W., EA
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