Mortgage modification

[MargaretMort]

Sorry about the heading, I don't know any other way to put it. Client has a son who has been a contractor, client helping to stake him. Client is the Guarantor for a loan between bank, son and his wife. The house was built, not sold, rented. Renter moved out, no new renter. Bank agreed to a modified note and mortgage in which only the interest is paid for a period of time. Client is paying the interest.

Everything is reported to son and spouse, of course.

I am assuming the client should be able to take the interest payments on the Sch A? I think I am hesitant because there will be no paper showing the interest in the client's name.

Thanks for your help, as always. MM

[gfizer]

While it's true you won't have a 1098 or similar interest statement from the lender, the client will have cancelled checks and/or bank receipts showing that he and not the son actually paid the interest. Just a thought, and I haven't done any research on it, but is there any way the son could do something like a 1099 nominee to his father?

[Gail in Virginia]

This is not a personal residence for client or son, if I am reading post correctly. Therefore, you must be talking about taking this as investment interest on the schedule A. If the father is not the one who will profit from the investment, I am not sure he can take the deduction even though he pays the interest. Instead this appears to be an additional loan to the son.