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Rental Property - Not Rental Property (Tax Law)

Mon, 22 Apr 2002 13:18:00 GMT

I just purchased a home for my Mother, due to her bad credit. We both live in VA. The new house is in my name, my loan etc... The only loan I could get was a real estate loan for rental property. She is paying the loan payment.
Tax questions:
- Should I be making the payments via my check?
- Can I claim the house interest on my taxes next year?
- Should this be listed as a second home on my taxes or rental property?
- If she's paying the loan, does this have to be reported as income for me since the loan was a rental property loan?
- Does this loan/house have to be reported on my taxes at all?

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  • Mon, 22 Apr 2002 13:49:00 GMT(1)
  • If the house is yours and your mother is making the loan payments, then the payments are considered rental income to you. If you do report them as rental income, then the fact that she is actually making the payments is not controlling and the payments are considered to have been made by you. Therefore, you should show the rental income and deduct the rental expense, including interest, taxes, and depreciation. Since you are renting the place out, you should show it as rental property. You probably will end up with a tax loss that way.
    If you do decide to go that way, although not necessary, it would be better procedure for her to pay you and for you to make the payments to the bank.
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