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Bridex100
Two Under Two Mommy
Member since 3/08 10420 total posts
Name:
Momx100
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Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
My parents are pretty much retired and I've been paying their mortgage and living expenses. In total, we probably "give" them $5k/month. They are not technically our dependents and I am not on their house deed or mortgage.
Can we still deduct the interest we pay on their house?
Is anyone else in a similar boat?
Last year, we had our own house and mortgage but we sold it and now rent in the city.
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Posted 2/17/11 11:26 AM  |
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LeShellem
A new beginning
Member since 2/07 3600 total posts
Name:
LeShelle
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Re: Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
You should be able to. If you were filing single, you could file head of household and your parents will be your dependent. If married it would just be added as dependents. However your parents can't file their taxes. If they make enough money to file taxes you will not be able to claim them.
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| Posted 2/17/11 12:58 PM |
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Bridex100
Two Under Two Mommy
Member since 3/08 10420 total posts
Name:
Momx100
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Re: Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
Posted by LeShellem
You should be able to. If you were filing single, you could file head of household and your parents will be your dependent. If married it would just be added as dependents. However your parents can't file their taxes. If they make enough money to file taxes you will not be able to claim them.
They just started collecting social security.
We looked into it briefly last year. We paid their mortgage then too. We were told our name had to be on the deed and/or mortgage for us to deduct the interest.
I think we should probably consult with a tax specialist. We've been using turbo tax.
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| Posted 2/17/11 1:00 PM |
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LeShellem
A new beginning
Member since 2/07 3600 total posts
Name:
LeShelle
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Re: Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
A good idea, not sure how you would claim interest for the mortgage.
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| Posted 2/17/11 1:02 PM |
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MarathonKnitter
HAPPY
Member since 2/07 17374 total posts
Name:
EMBRACING CHANGE
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Re: Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
i think that to be able to deduct their mortgage interest and property taxes, you have to be, at least, part owner of the house.
now, if you're paying more than 50% of their living expenses, you can claim them as dependents on your return.
i would strongly suggest you seriously look into this. if you're supporting your parents to that extent, you should come to some kind of agreement with them as to how the financial ramifications will affect you all
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| Posted 2/17/11 1:04 PM |
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Bridex100
Two Under Two Mommy
Member since 3/08 10420 total posts
Name:
Momx100
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Re: Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
Posted by libby2595
i think that to be able to deduct their mortgage interest and property taxes, you have to be, at least, part owner of the house.
now, if you're paying more than 50% of their living expenses, you can claim them as dependents on your return.
i would strongly suggest you seriously look into this. if you're supporting your parents to that extent, you should come to some kind of agreement with them as to how the financial ramifications will affect you all
My parents have been wanting us to put the house in our name. I've been putting it off because they will probably sell in the next year or two.
We currently pay about 80% of their living expenses. My mom also watches DS while DH and I work.
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| Posted 2/17/11 1:09 PM |
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blustar214
So in love with my little girl
Member since 1/10 2471 total posts
Name:
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Re: Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
I'm not a tax specialist, so I'm not 100% certain, but I believe that you need to be legally responsible for the mortgage if you want to deduct the interest on your taxes.
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| Posted 2/17/11 2:13 PM |
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Peaches77
LIF Adult
Member since 1/10 993 total posts
Name:
Me
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Re: Tax Deduction Question: Does anyone pay their parents' mortgage or support their parents?
You have several different "issues" going on here.
You cannot deduct the real estate taxes paid as you are not on the deed to the home.
In this scenario, your parents home does not fall into the qualified home rules for you to take the mortgage interest deduction.
Per IRS Publication 936: "For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities."
Home Mortgage Interest Deduction - IRS
You claim that you are "giving" your parents approximately $5K per month for their expenses. Technically, you are gifting them money and therefore, you have to take gift tax return filing rules into account.
They say they want to put you on the deed, but may sell in the next few years. Would they transfer their ownership of the house to you? Or would they add you to the deed? There may be gifting issues their if they are going to transfer ownership to you.
Also, they may qualify to be your dependents. However, not knowing their tax situation, it may not be beneficial to them for you to claim them as dependents. Here are the dependency rules to make sure that they qualify:
Dependency Exemption
You may want to speak to a tax professional regarding your specific situation as it sounds like you have a lot of different things going on.
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| Posted 2/17/11 2:13 PM |
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