Legal Question in Real Estate Law in California

Re: morgaage interest tax deduction.

As I understand it, and I'm no expert on taxes, in order to claim a deduction for mortgage interest, two requirements must be met: (1) the taxpayer claiming the deduction must be legally obligated to make the payments; and (2) the taxpayer claiming the deduction must actually make the payments.

Slipping money under the table to make it look like the payments are being made by X when the money actually comes from Y would be fraudulent and the money would perhaps also be a taxable gift.

Writing a contract attempting to shift the payment burden from the actual borrower to a person who wasn't the borrower could also be a fraud, a breach of the loan agreement, and/or result in a taxable gift by the person assuming the burden to the person relieved of the burden.

I'd suggest discussing the situation with a qualified tax advisor, but my hunch is that the answer is you can't do this.

Re: morgaage interest tax deduction.

Mr. Whipple's conclusion seems correct. I take it that your son made the down payment on the house so he is the real owner of it even if you co-signed [co-signing does not confer title]. He does not pay you or owe you rent; as he makes the mortgage payments and you do not, he should be able to deduct the interest he is paying. Even if yours is the only name on the loan, you have not made any of the payments. So it does not seem that you should be able to claim any deduction for interest you never paid.