Tax implications of paying a foreign relative's mortgage

[PAccisano]

Hi all. My wife and I are looking to buy a house in the near future, but the current sky-high mortgage rates are definitely limiting our options. My wife is Taiwanese, and her family have a condo in Taipei which they own outright. Since rates in Taiwan are much lower (mortgages are 2% currently) we are thinking about asking them to take out a mortgage or home equity loan on their condo and lend us the cash from that, so we can buy our house. We would then pay their loan payments.

Can someone explain what the tax implications of doing this would be? What would be our reporting responsibility, and would we end up paying more in taxes than we realize?

[MarilynG1]

You wouldn't be able to claim a tax deduction for your relatives' mortgage payments, as your name would not be on the loan, so you are not legally required to make the payments. 

Add that payment to any other payment you would have (their home equity loan proceeds might only equate to a down payment here).

So you'd essentially have two mortgage payments; only one that's deductible.

As far as paying more in taxes, having a mortgage does not increase your tax obligation.  Depending on your mortgage payments, real estate taxes, etc. you may want to try a Mortgage Calculator to estimate your costs.