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lianamyers · Jun 8, 2012, 02:25 PM

We sold our home in a short sale and my son purchased the home we currently live in. Our intent is to buy it from him, but the short sale prohibits us from obtaining a mortgage for three years.

We are getting slammed in taxes because we are not able to claim the mortgage interest even though we make the mortgage payment since the loan was taken out by our son.

Is there any kind of situation or agreement (lease option or other) that would allow us to claim the mortgage interest?

Thanks

ScottGem · Jun 8, 2012, 02:35 PM

I don't think there would be.

AtlantaTaxExpert · Jun 8, 2012, 03:31 PM

How much was paid for the house?

lianamyers · Jun 8, 2012, 04:18 PM

$274k

Fr_Chuck · Jun 8, 2012, 04:42 PM

So you are using your son to cheat the laws on purchase another home, since a short sell had the bank lose money on its loan.

Now because you can't use it as a tax deduction, you are upset ? Why did you not just keep the home you owned, even if it was upside down at the time ? Why did you not rent till you could better afford a home ?

Also the property tax is much higher, since it is not the owner who lives in it, so there is no homestead exemptions allowed. ( legally )

AtlantaTaxExpert · Jun 8, 2012, 04:57 PM

In the past, your son could do a wrap-around mortgage, but these days...
1) may no longer be legal and
2) if the first mortgage holder finds out about it, they will call the mortgage.

Best you just take your medicine and pay the rent.

lianamyers · Jun 8, 2012, 07:11 PM

Not trying to cheat. Husband's business succumbed to the recession and we could no longer meet our obligations. Tried for a year to get a modification with no success. Believe me, it was very difficult leaving my dream home.

ScottGem · Jun 9, 2012, 04:39 AM

Originally Posted by lianamyers

Not trying to cheat. Husband's business succumbed to the recession and we could no longer meet our obligations. Tried for a year to get a modification with no success. Believe me, it was very difficult leaving my dream home.

While I understand that you have gone through a devastating time and how difficult it was to lose your home (whether it was a dream home of not), you have to face up to the fact that your question WAS asking how to cheat.

The law is clear, only the owner of a property used as a primary or secondary residence can claim the interest on a mortgage as a deduction against taxable income. And since the law also specifies that you cannot qualify for a mortgage for three years due to the need for a short sale, asking for a way to get around these laws is asking how to cheat.

I'm sure you didn't think of it that way, but we call them as we see them. The sooner you understand that trying to get around the letter AND intent of existing laws is cheating. the better you will be able to deal with your situation.

lianamyers · Jun 9, 2012, 07:12 AM

Thanks for the clarification. I'm not attempting to get around the law, just asking what the law is. You've been helpful in that respect.