Can I Claim My Parents' House If I Pay the Mortgage?

Can I Claim My Parents' House If I Pay the Mortgage?

Can I Claim My Parents' House If I Pay the Mortgage?

When you were young, your parents took care of you. Now that you are grown and your parents are old, you might need to lend them a hand, both physically and financially. A portion of that help might include helping them maintain their home or even helping with the bills, such as their utilities or mortgage payment.

Mortgage Interest

The Internal Revenue Service allows you to deduct mortgage interest on your main home and on a second qualifying home. To qualify for the mortgage interest deduction the loan must be secured by the home, and you must be liable for making the payments. If the loan is in your parents' names and you have no legal obligation to pay the loan, you can't take the mortgage interest deduction, even if you are making the payments.

Real Estate Taxes

You can deduct the real estate taxes on properties you owned, provided the taxes were based only on the assessed value of the property and tax rates were charged uniformly against all property in the jurisdiction. The real estate taxes must have been imposed on you, and you must have paid those taxes during the tax year before you can deduct them. If your parents were the property owners, and you just paid the bill, you can't deduct those real estate taxes, since they were imposed on your parents, not you.

Gift Tax

Any amount you pay for mortgage payments for your parents is considered a gift by the IRS. Gifts are not considered taxable income to the recipient, and they are not tax-deductible by the giver. You are limited in the amount you can give to any one person during the year before you are obligated to pay federal gift tax. As of the 2018 tax year you could give each person up to $15,000. If both of your parents are living, you could give up to $30,000 per year toward their mortgage without incurring the gift tax.

Parents As Dependents

If you don't own the home or have a legal obligation to pay your parents' mortgage, you cannot claim the home as a tax deduction. But if you pay for more than half of your parents' support for the entire tax year, and they meet the IRS' other tests as qualifying relatives, you might be able to claim your parents as dependents when you file your federal income tax return, which means you get an exemption that reduces your taxable income.

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About the Author

Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.