We've been experiencing some hard times for homeowners with foreclosures rampant, high unemployment, falling home prices, creative financing options kicking in, and mortgage payments which go up instead of down. As a parent or a grandparent, you may have felt it necessary to help the younger generation meet their financial obligations by pitching in and paying one or more mortgage payments for them. At the same time, you may wonder if the interest that you are paying for them can be used as a deduction on your income taxes. Although this type of interest generally isn't yours to claim, there are ways in which you can change the rules.
The main consideration is about who is liable for the loan. If it's in your child's name, then it isn't considered to be your liability. Therefore, you need to actually share the house with your child before you can share the liability. Of course, by doing so you are also assuming total liability should your child have to forego his or her own claim to the property. In other words, you could end up holding the financial bag of paying for a second property that technically isn't yours. Therefore, you need to think hard and long before you accept any permanent responsibility for your child's debts.
Another factor to think about is that if you won't have enough deductions to file for itemized deductions and will only be claiming the standard deduction on your income taxes, then there's really no point in becoming liable for your child's obligations. You can still help out if you want to, but you don't have to take on the responsibility for the loan, because you won't be able to claim the interest anyway. In order to file itemized deductions, you need to have enough qualified expenses during the year to meet the government threshold. Some of the other things that can be deducted are your own mortgage interest payments, medical expenses, and property taxes.
While it's commendable that you wish to help out your child when he gets into financial trouble with his mortgage payments, it isn't usually feasible to think that you'll be able to get a kick-back in the form of a tax deduction for the interest you are paying. Talk with your tax consultant to find out if you can qualify for any deductions as the result of your financial assistance in behalf of your child.
Mortgage companies in the Madison, Wisconsin area are not hard to come by. Quality mortgage companies can be difficult to find. For the lowest rates and never any hidden fees, visit Easy Mortgage Company's site here: mortgage broker Janesville WI or at mortgage brokers Madison.
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