Private Second Mortgage Interest Deductable?

Comments(5)

• 
  cjmazur8th May, 2009

  a note and a mortgage/trust deed.

• 
  ceinvests8th May, 2009

  and verifiable payments!! Keep it trackable
  
  and they will have to claim the income...

• 
  NewKidInTown38th May, 2009

  If I get a secondary loan on my property from a private lender such as my parents and pay them monthly interest, is this interest tax deductable?
  
  The answer is -- it depends. What property will secure the loan? What will you do with the loan proceeds. What is the loan amount?
  
  We need more facts and circumstances before we can give you a definite answer.

• 
  jesses8th May, 2009

  Thanks for the response NewKidInTown3, the loan is for a residential duplex. The loan will be used in the downpayment and represents 5% of the purchase price.

• 
  NewKidInTown38th May, 2009

  So you are going to secure the loan with property you plan to purchase. Yes, the mortgage interest is an allowed deduction.
  
  If you are occupying the property as your primary residence, the mortgage interest deduction is taken on Schedule A, buy only if you itemize your deductions. If the property is to be a rental, the mortgage interest deduction is taken on Schedule E.
  
  To take the mortgage interest deduction, your tax preparer will need the name, address, and SSN of the person who gave you the private loan when preparing your tax return.
  
  For tuture reference, income tax questions get a better response if posted in the Tax Strategies Forum.