I hope this will not turn into a political discussion as anything related to tax has been high jacked and locked. I am asking about what is legal, accepted, and common practice.
Recently I realized that based on my projected income and mortgage payment schedule. I'll be done with my own mortgage way ahead of time due to aggressive principle payment. In this case my mortgage interest deduction will be near zero very soon and I'll be hitting AMT. Wife and I agree that putting extra money in retirement plan (Roth IRA, for example) is not a good idea, because based on our aggressive investment we are doing, we're very likely going to be paying even more taxes in retirement than now, and we'd rather use the money to invest right now (since the market is still low, relatively speaking) and help her parents out.
One thing we would like to do if possible, is to help pay for her parents' mortgage. They are unfortunately unemployed / underemployed, collecting unemployment and working 1-2 days per week on and off, and near retirement age (65), not much savings (spend all of them on children's education). Currently they have a mortgage that's near the cost of the home that has another 25 years to pay off. My wife's and her brother's names are not in the house or the mortgage. Since their parents' income is so low, it wouldn't do much good to have them use the mortgage interest in itemized deduction. Would it be legal for us to help them out by paying for their mortgage and claim the interest deduction, does the loan holder (i.e. Fanny) have to include our name in the mortgage, does our name have to be on the deed of the house? Can this be done only to your own primary residence? any residential property you own? or any property you are paying for?
Recently I realized that based on my projected income and mortgage payment schedule. I'll be done with my own mortgage way ahead of time due to aggressive principle payment. In this case my mortgage interest deduction will be near zero very soon and I'll be hitting AMT. Wife and I agree that putting extra money in retirement plan (Roth IRA, for example) is not a good idea, because based on our aggressive investment we are doing, we're very likely going to be paying even more taxes in retirement than now, and we'd rather use the money to invest right now (since the market is still low, relatively speaking) and help her parents out.
One thing we would like to do if possible, is to help pay for her parents' mortgage. They are unfortunately unemployed / underemployed, collecting unemployment and working 1-2 days per week on and off, and near retirement age (65), not much savings (spend all of them on children's education). Currently they have a mortgage that's near the cost of the home that has another 25 years to pay off. My wife's and her brother's names are not in the house or the mortgage. Since their parents' income is so low, it wouldn't do much good to have them use the mortgage interest in itemized deduction. Would it be legal for us to help them out by paying for their mortgage and claim the interest deduction, does the loan holder (i.e. Fanny) have to include our name in the mortgage, does our name have to be on the deed of the house? Can this be done only to your own primary residence? any residential property you own? or any property you are paying for?
