Who Gets Mortgage Tax Deduction? Equitable and Beneficial Owners

Equitable and Beneficial Owners

Generally real estate taxes and home mortgage interest are deductible only by the legal owner of a property, but only if paid by that owner.

There are instances where a taxpayer who does not have legal title to a residence may be able to claim a tax deduction for the real estate taxes and mortgage interest on that property if he or she, or both can be considered the "equitable and beneficial owner".

An "equitable and beneficial owner" is a person, or persons who has the exclusive "burden and benefit" of the property. That individual or couple must also exclusively occupy the property for the entire tax year, make all tax and mortgage payments, and importantly maintain the property.

In many instances young married couples or other family members cannot qualify to obtain a mortgage and in such instances their parents or other family members will buy a house either using the parents' money, the couple's money or a combination of both.

The deed and mortgage will be recorded in the name of the parents or other family members who live elsewhere, but the beneficial owners live in the property as their personal residence, maintain it, and pay all the bills, including the property taxes, and the monthly mortgage payments.

Generally if these conditions are met, and the intention of the parties were such that the property was in fact that of the beneficial owners then in such a situation the deduction for the mortgage interest and property taxes can be claimed by those that meet the requirements.