The Tax Court held to disallow deduction for home mortgage interest because petitioner was not the equitable owner of property legally owned by her brother.
Petitioner’s brother purchased a house and, as the sole legal owner of the house, made the down payment and mortgage payments until he became unemployed. Then, petitioner started making mortgage and home insurance payments for her brother, while residing in the house with him. Although she was not the legal owner of the house, petitioner asked for mortgage interest deduction and the IRS denied it.
The court ruled that petitioner was not the legal or equitable owner of the property at issue and she was not entitled to a mortgage interest deduction in 2010.

See Puentes v. Commissioner, T.C. Memo. 2014-224.

Posted by Jin Keol Park, Associate Editor, Wealth Strategies Journal