Subject To Interest Deduction
I purchase an investment foreclosure property for 200k subject to the exisitng mortgage of 100k. I have made the mortgage payments for the last year. Am I the one who can claim the mortgage interest as deduction?
I have heard many different opinions, all my real estate freinds and some very experienced real estate friends say I can claim the deductoin and the seller who is still on the loan does not get to claim it ! one CPA i know agrees, the other CPA says no, "only the person on the loan can take the deductoin" Any thoughts? or even better anyone have an IRS code or something that explains it. thanks!!!!
smalfry,
Glad to meet you. The seller who sold you the property is not intitled to the deduction as he did not make the payments.
Listen to your "other CPA" because he is correct, you are not entitlled to take the deduction even though you are making the payments.
Have your very experienced real estate friends check this link out, look on page two lower left hand side bottom of the page.
http://www.irs.gov/pub/irs-pdf/p936.pdf
John $Cash$ Locke
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