All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎09-06-2017
Accepted Solution

Equitable Owner in PA

My son in law lives in my second home and does not have legal title to the property. He pays me for the real estate taxes, provides all maintenance costs. He does not pay the mortgage or any other taxes or rent. Is he considered an equitable owner and if so has the ability to claim a Schedule A deduction for the real estate taxes?

 

Thanks

Paul

Tax Pro
Posts: 5,536
Registered: ‎02-23-2016

Re: Equitable Owner in PA

Hi Paul,

 

 

Welcome to the H&R Block community.

 

I've actually seen this question a few times and this is a situation in which nobody really wins.  Your son won't be able to claim any deductions for homeowner expenses because one of the requirements for the real estate taxes, mortgage interest & mortgage insurance deductions is that you are a legal owner of the home (on the title) which he is not.

 

You, on the other hand, may also not be able to claim any expenses because you don't live in the home.  However, you can claim expenses for 1 secondary home in addition to your primary residence if certain requirements are met.  If you lived in the home at some point during the year (for a week or two for a vacation for example) and you paid the homeowner expenses yourself (you paying the expenses with your son-in-law's money doesn't count) then you can claim the expenses.

 

There is also a third option.  If you were to treat the home as a not-for-profit rental, meaning that you're renting it to your son-in-law without the intent of earning a profit and you're renting it below market value for a rental home in your area, then you can report the rent you collect as income on Line 21 of the 1040.  You would also be able to deduct expenses up to the extent of the rent received on your Schedule A.  So if your son-in-law paid you $10,000 for the year to live in the house then you could deduct up to $10,000 worth of expenses on your Schedule A.  The expenses do have to be deducted in a certain order though, and I'll gladly explain that later on if you end up going with this option.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 2
Registered: ‎09-06-2017

Re: Equitable Owner in PA

Thank you very much. This is most helpful. I appreciate your prompt opinion.

Best

Paul

Highlighted
Tax Pro
Posts: 5,536
Registered: ‎02-23-2016

Re: Equitable Owner in PA

You're quite welcome.