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DEDUCTION ALLOWED FOR AN EXPENSE NOT LIABLE FOR

On March 6, 2015 posted in Uncategorized

DEDUCTION ALLOWED FOR AN EXPENSE NOT LIABLE FOR

MORTGAGE INTEREST DEDUCTION ALLOWED FOR BENEFICIAL OWNER To be entitled to tax deductions, a well-established rule says you have to pay a deductible expense–and you have to owe it. This means that you cannot get a deduction for paying an expense that you are not liable for. The U.S. Tax Court, however, refused to invoke this rule in a case involving a taxpayer who made mortgage payments on a loan that was not in his name. The taxpayer also did not hold legal title to the property. His Mother and brothers did. The Court found that it didn’t matter, because the taxpayer had an oral agreement with his Mother and siblings granting him an interest in the home in return for paying the mortgage and property expenses. The Court also noted that the taxpayer’s name was eventually added to the legal title. Read it here: Van Phan, TC Summary Opinion 2015-1.