Can You Deduct Mortgage Interest If You’re Not on the Title?
Did You Know? Did you know that St. Patrick wasn’t Irish? He was born in Roman Britain and brought to Ireland as a teenager. He later returned by choice, which is how he became associated with the country.
WHEN CAN COURTS DENY THESE DEDUCTIONS? The court distinguished the Uslus’ case from others where taxpayers: • Did not personally make mortgage payments. • Could not show that the home
Paying a mortgage on a home you don’t legally own? A landmark tax case explains when you may still deduct the interest. UNDERSTANDING EQUITABLE OWNERSHIP AND MORTGAGE INTEREST DEDUCTIONS IN CALIFORNIA In Uslu v. Commissioner , the U.S. Tax Court clarified that mortgage interest deductions can apply even when a taxpayer isn’t on the property title, so long as they carry the financial burden and beneficial control. THE USLUS’ SITUATION: • The couple sought to buy a home in Covina, California. • A recent bankruptcy prevented them from qualifying for a mortgage. • A brother and sister-in-law took legal title and secured the loan. • The Uslus paid the mortgage, lived in the home, and covered all upkeep. • The title holders never lived there or made payments. • The IRS denied nearly $19,000 in interest deductions because the Uslus weren’t legally liable. THE COURT’S VIEW: SUBSTANCE OVER FORM The Tax Court ruled in the Uslus’ favor, offering a crucial clarification about IRS rules for the mortgage interest deduction. You may deduct mortgage interest if you are either: • The legal owner, or • The equitable (beneficial) owner of the property. HOW THE COURT DETERMINED EQUITABLE OWNERSHIP? The court looked at behavior, not just documents. Factors included are:
Here are three more little-known facts surrounding St. Patrick’s Day.
Green wasn’t the original color! Early images of St. Patrick show him wearing blue. Green became linked later because of Ireland’s landscape and national identity. Corned beef and cabbage isn’t traditionally Irish. That meal became popular among Irish immigrants in the U.S. In Ireland, pork was more common. It’s now a global event. Cities around the world dye rivers, light landmarks green, and host parades.
was used as a personal residence.
• Lacked written or consistent
evidence of ownership intentions.
WHAT DOES THIS MEAN FOR CALIFORNIA HOMEOWNERS, FAMILIES, AND BUSINESS OWNERS? Tax ownership depends on responsibility, not the name on the deed. You may qualify for the mortgage tax deduction if: • You make the mortgage payments. • You live in the home as your residence. • You handle repairs, taxes, and upkeep. • You benefit from appreciation or equity. • You carry the burdens of ownership. BEST PRACTICES TO PROTECT YOUR HOME MORTGAGE INTEREST DEDUCTION To strengthen a claim of equitable ownership, California families should consider: • Written agreements outlining payment and ownership intent • Consistent mortgage and expense payment records • Proof of residence (utilities, insurance, tax statements) • Contributions to maintenance and property improvements • Legal guidance when structuring shared or family ownership GET TRUSTED GUIDANCE FOR SMART OWNERSHIP AND TAX DECISIONS IN CALIFORNIA California real estate and tax rules are complex. At Dahl Law Group, we help families structure ownership and protect mortgage interest deductions.
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• Who lives in the home? • Who pays the mortgage? • Who maintains and repairs the property? • Who bears the benefits and burdens of ownership?
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