Mortgage Interest

[Denne]

I am working on a return today. The gal is paying all of the expenses for a house that her deceased mother owned. There is no income to the estate and she lives in the home herself. Since she is paying all of the expenses she would like to deduct the mortgage interest and property taxes ahe has been paying for several years on her taxes. When the house is finally sold the proceeds will go to her and her three sisters equally. In my view she does pay the mortgage and interest that will not be reimbursed in any way. I am thinking about listing the interest as being paid to the estate...any reason not to do that? Not sure yet what I am going to do with the property taxes. It is her homestead until the house is sold. Other suggestions??

[jainen]

>>any reason not to do that?<<

Would you care to deem her free rent as taxable income? In my opinion, she can't have it both ways. She could pay rent to the estate, and the estate could deduct expenses. Or the estate could distribute the property to the heirs, and she could deduct the expenses directly. But in my opinion, if she does neither, she gets neither.

[kcjenkins]

It would be hard to explain her paying these expenses as anything else than rent. Just because that rent is based on taxes or mortgage payments does not mean that they are those, TO HER. Because she is not obligated on the mortgage nor for the taxes.

[OldJack]

She can't deduct real estate taxes or mortgage interest on a home she does not own. The estate could probably reimburse her if other beneficiaries did not object. Has the estate been open for several years as she indicated she has been paying taxes for several years?