Claiming Interest on HELOC

[dzaazter]

Hi everyone,

I am not on title/deed of the house. I am however on the HELOC loan taken out on the house with my parents. I pay the interest and principal every month. Am I eligible to claim the interest on my taxes even though I am not on the title of the house? Thanks in advance.

Daryl

 

[Zigner]

No, you are not eligible to claim the interest.

 

[adjusterjack]

No.

According to IRS Publication 936 Page 2:

"You can deduct home mortgage interest if all the following conditions are met.
You file Form 1040 and itemize deductions on Schedule A (Form 1040).
The mortgage is a secured debt on a qualified home in which you have an ownership interest."

If you become an owner in 2019 the next hurdle to overcome is:

"Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan."

Read the publication.

https://www.irs.gov/pub/irs-pdf/p936.pdf

 

[davew9128]

No, you are not eligible to claim the interest.

That's not necessarily true. The question first revolves around whether there is equitable ownership, and isn't immediately obvious either way.

Of course more relevant to the point is that fact that HELOC interest is no longer deductible as such for individuals anyway...

 

[Zigner]

That's not necessarily true. The question first revolves around whether there is equitable ownership, and isn't immediately obvious either way.

Of course more relevant to the point is that fact that HELOC interest is no longer deductible as such for individuals anyway...

1: wrong
2: wrong

 

[davew9128]

1: wrong
2: wrong

I agree. You are. On both counts.

Suggest you read IRC 163 as to why you are.

 

[Taxing Matters]

1: wrong
2: wrong

Sorry Zig, but davew9128 is correct on #1. While you do have to be an owner of the property as one of the requirements for claiming home mortgage interest, you do not necessarily have to be on the deed to the property (a title owner) of it to qualify. An equitable ownership interest also may suffice. As always, the details of the arrangement matter.

As for #2, he/she is partially correct. Home mortgage equity loans (including HELOC loans) are no longer deductible unless the proceeds of the loan were used "to buy, build or substantially improve the taxpayer’s home that secures the loan." See the IRS news release on the subject for more information. So unless HELOC loan proceeds were used for those limited purposes the interest is not deductible as home mortgage loan interest (though it might be deductible under some other provision, again the details of the loan matter). The change to the home mortgage interest rules were part of the Republican Tax Act passed at the end of 2017 and applies for tax years 2018 through 2025.