Granddaughter paying mortgage payments

[David]

Granddaughter and grandmother are both listed on the deed to the residence the granddaughter lives in. However, in order to purchase the house the mortgage is in the grandmother's name only. I'm sure that's why the grandmother wanted to be listed on the deed.

The granddaughter lives in the house and pays the mortgage payments and all other expenses related to her residence. The grandmother does not live in the house.

It appears from sec. 1.163-1 (b) that since the granddaughter is an equitable owner of the house that she can claim the mortgage interest even though she is not directly liable for the mortgage. Am I interpreting this cite correctly?

The 1098 will report only the grandmother's name and SSN. Will the granddaughter's mortgage interest deduction raise red flags since the IRS will not have a 1098 that matches the granddaughter's SSN?

Thanks.

[Yardley CPA]

As long as the grandmother does not deduct any of the mortgage interest, the granddaughter should be able to do so, no?  Since the granddaughter is actually paying the mortgage she should be entitled to deduct the interest. 

In the event it is questioned you can provide the proof you speak of and that should provide justification for the granddaughter deducting the mortgage interest.  Unless I'm missing something??

[grandmabee]

there is a special line you fill out if the 1098 is someone else name and you are claiming. it.  attached schedule to schedule A interest paid.  do the jump to option from the line.

[David]

Thanks, everyone.