can the mortgage interest be divided?

What is the name of your state? North Carolina

Mom passed away June 13. The property she left to my brother and I has a mortgage. The mortgage company was notified that we would each be responsible for 1/2 the monthly payment and agreed to this. $3,000 interest was paid on the mortgage for 2003.

When we file Mom's final return do we deduct the interest she paid ($1500) on her return? Can my brother and I then each deduct $750 on our tax returns?
Thank You

[abezon]

The interest she paid is deducted on her final return. You can deduct interest you paid only if the home was your promary or secondary residence. Also, you need to talk to an estate tax person about whether it's better to claim the interest or declare the property to be investment property so you can claim a capital loss when you sell it.

Ex: house was worth $450,000 when M died; was sold 9 months later for $480,000. After the costs of sale were taken into account, there was a loss of $25,000. If the house was investment property, the loss is passed to the heirs & they claim a capital loss (Schedule D) until they've used all the loss. If the house was personal use property, the heirs could have deducted $3,000 in interest (Schedule A, 2% Miscellaneous deduction) but would not be able to take the loss.

The property we were left is 6 acres of land. There is a log house on it but it needs lots of renovations before it can be lived in. There are also rental units as well as a small mobile home park. My brother and I both own mobile homes and live on the property. We receive the rental income also so will file a schedule E with our 1040's. The property is zoned residental/commercial and has tripled in value in the last few years so there would be no loss if sold. Since the property is our residence can we still deduct the mortgage interest we each paid?