danaThatsCauseWhy wrote:

- quote -

And thank you for "the rest of the story".

Nothing illegal about such an arrangement. You're just
doing a favor for mother with no tax consequences.

Unless you actually life in that home during part of the
year, you can't really call it a "second home" and deduct
the interest.

You're a good daughter.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 20 Mar 2005

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"danaThatsCauseWhy" <danahibbs[at]hotmail.com> wrote:

- quote -

What I meant was that I agree with Harlan that helping your
mother is a very good thing to do. But the way you have
chosen to help her (having her make the mortgage payments
directly) may not be the best way to structure the
transaction from the standpoint of obtaining financial
benefits.

You'd have to check with your own tax professional, who
knows your particular situation. But it could be more
beneficial to have her pay you the money as rent, and you
pay the bank. I suppose it could also be structured as her
making the payments to you as gifts, but that would be
harder to justify, but that could also be a better
alternative, from the standpoint of your own finances.

Stu

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Stuart Bronstein wrote that we are doing the right thing but
in a very very wrong way. PLEASE elaborate on that. I
don't want to be doing the wrong thing, but I don't really
know how to treat this since the house is in our name.

I'll attempt to explain the rest of the story. As I told A
G Kalman - My mother does pay me the money in cash to make
the mtg, insurance, utilities, tax payments on this house.
She gives us the cash to cover the bills, and then I make
out the checks for the payments. We like to complicate
things. Basically, my mother lives with her husband in
another state and this is a house that she comes and stays
in for two to three weeks every month. She wanted to set it
up this way so that upon her death the house would belong to
us and not her husband, as it is required in her legal state
of residence. She basically did not want her husband to
even know about this (I don't approve of this, but she is my
mother, and now I'm stuck in the middle of it). So I
basically make the payments with the cash she gives me for
it. Like I said, complicated. I just don't know what the
proper and legal way to handle this with the IRS. I don't
want to get audited 10 or 20 years from now and loose the
house, or owe lots of $$ for not claiming the house
properly. I think that about covers it, well, at least the
highlights

Dana

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Stuart A. Bronstein wrote:
- quote -

naturally I was commenting on the childrens' love and
affection for a parent and the desire to take care of her as
she once took care of them. Although we do not know the
"rest of the story", just perhaps mother couldn't qualify
for a mortgage, but can manage to make the payments out of
her social security.

But then, we don't really know.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 13 Mar 2005

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In reply to A. G. Kalman - My mother does pay me the money
in cash. She gives us the cash to cover the mtg and
utilites and then I make out the checks for the payments.
We like to complicate things.

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A.G. Kalman wrote:
- quote -

Actually, the OP said mother is paying the mortgage, which
includes one presumes some portion of principal repayment.
Therefore there is some remuneration to the owners.

But they do not need to declare it as 'rent', and yes they
are doing the right thing!

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Harlan Lunsford <hlunsford[at]bellsouth.net> wrote:
- quote -

But in a very, very wrong way.

Stu

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danaThatsCauseWhy wrote:

- quote -

I don't see where you have any rental income. You state that
your mother is making the interest and tax payments. I
assume she is paying those directly. I.e., she is not paying
you and you are making the payments. No tax deduction for
her (she is not the owner and I assume not liable for the
loan) and no tax deduction for you as you did not make any
tax deductible payments. You can certainly let her live
there rent free. If you make the mortgage and tax payments
you would get a tax deduction for the property taxes paid
and the qualified mortgage interest paid. You can also opt
to set this up as a rental and start charging her a fair
rental value. That puts you on a Schedule E where you may
take the above mentioned deductions as well as other items
of expense.

--

Alan
http://taxtopics.net

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danaThatsCauseWhy wrote:

- quote -

No, since it's not a money making venture. You and your
brother are just helping your mother out.

- quote -

No, since you're not actually paying these items.

- quote -

No, because y'all don't live there.

- quote -

At that time, IF you're charging her a fair rental value,
then consult a local tax pro to determine the situation at
that time.

Y'all ARE however doing the right thing.

ChEAr$,
Harlan Lunsford, EA n LA
Wed 9 Mar 2005

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danahibbs[at]hotmail.com asked:

- quote -

If your mother is paying the "mtg and everything" ... then
it would seem that you have really only provided the down
payment -- as a gift -- and your mother is actually paying
the costs of maintaining the home. So you can't even
declare she is your dependent, at this time.

If you intend to claim this "as a second house," when would
you begin to make the payments "with her living there"? If
you were to do so immediately, then you would have a
straightforward claim that this was a home you were
providing for your mother, and claim her as a dependent. In
that circumstance, it would be proper to deduct the mortgage
interest on your Schedule A, presumably along with the
interest payments for your main home. (You could think of
it as if you had added a "mother-in-law" suite -- except at
a different address.)

Your mixture of intentions doesn't make it possible to give
a clearcut answer. Certainly, if you intended this to be a
rental property, your mother would have to sign a lease and
her payments would be made to you -- and should be
equivalent to market rates for similar properties. You
would then make the mortgage payments. (If you choose to do
that, please seek professional help.)

Bill

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We have purchased a house for our mother to live in.
Mortgage and everything is in our name. She pays the mtg
and everything. Do I need to list this as rental property
and claim her payments as income? Or can we not file/claim
anything on this house? Or can we just claim this as a
second house. When we begin to make all the payments on the
house, with her living there, how would I claim this house?

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