Income Tax Question/LOC Question

[ChrisFoley]

Hello,
I am using a LOC that is not in my name for investing in real estate. It is in my parents name. I pay the interest on the LOC.

Can I claim the interest in my Income Tax?

What should I have written up for my parents (who`s name the LOC is in) to sign so I can legally claim the interest?


Thank you in advance,

Chris Foley

 

[Dan_Eisenhauer]

They are loaning you the money for you to buy your property. Yes, that interest is deductible by you. However, your parents should also report that interest as income, while off setting it with the interest they pay to the bank. It adds an extra step in their tax returns, but it eliminates questions during an audit, should one happen.

I have not looked, but there may be a Promisory Note, or similar document in the critical forms section. All you need is a letter, signed by you all, outlining the terms of your agreement, including the principal amount, the interest rate, and the term of the loan.