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In order for mortgage interest to be deductible, your mortgage has to be a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage or deed of trust) that makes your ownership in a home security for payment of the debit. The deed of trust must be recorded under the local laws that apply to where you live. So you would have to sign a deed of trust which shows your father-in-law as the secured debt holder on your home. A title company in your area could help you to prepare this paper work. Once the loan was repaid, he would sign a deed of release.
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