Is interest from a private mortgage deductible?

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My parents loaned my wife and I the money to buy our 1st house. Can I deduct the interest that I pay; even though, the loan isn’t recorded anywhere? What forms do I use, how do I go about doing it?
We set up an amortization table to calculate the interet paid each month.

How do we go about getting the loan recorded to consider the property securing the loan?

5 Comments
  1. Reply
    tro
    May 1, 2011 at 6:26 am

    you really need some kind of contract
    how is the interest calculated, does your family issue you some kind of statement as to the amount of interest?
    yes, personal loans for mortgage are deductible, you need SS #’s to report on the Sch A

  2. Reply
    Wayne Z
    May 1, 2011 at 6:33 am

    If the loan is not recorded with anyone, it is considered a personal loan and the interest is non-deductible.

    Your parents, however, must still pay tax on the interest that they are receiving.

  3. Reply
    Doctor Deth
    May 1, 2011 at 7:00 am

    if you deduct it – they have to claim it as income – talk to them – they could get in trouble with teh IRS if they don;t declare that income

  4. Reply
    HHSDad
    May 1, 2011 at 7:04 am

    Interest on a private mortgage secured by your principal residence is deductible. It is reported on Schedule A and you are required to give the name, address and Social Security number of the person you are paying the interest to.

  5. Reply
    Bostonian In MO
    May 1, 2011 at 7:30 am

    Mortgage interest is only deductible if the property secures payment of the loan. The loan can be a regular commercial loan or a private loan but the home MUST secure the loan.

    Most jurisdictions require that any lien against a property be recorded within a short period of time or the lien is unenforceable. Typically this is within 30 to 120 days depending upon local laws and practices.

    If they didn’t record the mortgage then the home is not securing payment of the debt so any mortgage interest payments that you make are NOT deductible.

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