We are co-owners on a single family home. The home is paid off, we would like to borrow against it. Can either owners claim the interest?

Asked by dkirwin5, Fruitport, MI Wed Aug 8, 2012

this is a parent/child investment. One party has terrible credit the other has excellent credit.

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3
Duane Rosenc…, Home Owner, Muskegon Heights, MI
Tue Aug 14, 2012
Because the home is co-owned both parties have to sign off on the loan application; therefore, lenders might be somewhat hesitant to approve funds for a home equity loan with one of the owners having terrible credit. Because only one of you qualify for the loan, based on the information you provided, the lending institution, if they do approve the loan under those circumstances, will approve it for the borrower with the good credit, of course. Inasmuch as that person will be responsible for the repayment of same, the associated interest can be deducted on your 1040. Because the home is a business, both parties, I assume, are sharing equally in repayment, therefore deduction would be determined and claimed at a 50/50 split. If you somehow manage to borrow funds against this property and do pay the loan back on your own, you can draw up a Stipulation and Agreement with the other party specifying which party is indeed borrowing, paying, etc. This is a legal and binding contract and will satisfy the IRS's qualifications as long as only one person is claiming the entrie amount.
0 votes
Annette Levi…, , New York, NY
Wed Aug 8, 2012
If you do a cash out refinance, the people responsible to pay the mortgage can deduct the interest.
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Wed Aug 8, 2012
The interest ?? If it is paid off there is no loan and so no paid interest that is deductible. What am I missing?
0 votes
We would like to borrow against the home. So there would be interest. Can either party claim the interest?
Flag Wed Aug 8, 2012
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