Have a Tax Question? Ask a Tax Expert
I have a few basic questions that will help me to answer your question.
1. Is the quit claim deed recorded so that you are listed as a legal co-owner of the property and you as well as your mother are liable for the property taxes?
And was this property quit claimed, recorded and legally co-owned by you prior to 2008?
2. Is the home mortgage co-owned by you and your mother, or is it strictly her liability?
Tax law is very explicit on interest payment deductibility.
1. From IRS Publication 936, you can read that:
"You must be legally liable for the loan. You cannot deduct payments you make for someone else if you are not legally liable to make them. Both you and the lender must intend that the loan be repaid. In addition, there must be a true debtor-creditor relationship between you and the lender. "
2. Perhaps you and your mother can visit with the mortgage lender and discuss something like a "wrap-around" mortgage for the house where you would be liable for the mortgage payments. The important feature of a "wrap-around mortgage" is that you have to record it, or it will not be considered a secured mortgage debt.
Please read this article on wrap around mortgages: http://www.mtgprofessor.com/A%20-%20Wrap-Around%20Mortgages/what_is_a_wrap-around_mortgage.htm
3. In retrospect, I can only offer that your mother might have borrowed the payments from you under a note payable secured by her ownership portion of the house. The interest deduction would still be unavailable to you, but your payments would then be an investment, rather than a nondeductible interest payment.
Contact me again for any questions!