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 » From: Washington, DC Dear TaxMama: My sister and husband have moved with my mom to help her. She is 89 years old. My mom owns property. Her expenses for health care are exceeding her capabilities, but she has two houses. Question - could my mom refinance her house without a reverse mortgate, and have my sister pay the mortgage AND take the tax break, but keep the house in the name of my mom? She is an 89 years old that is somewhat stubborn. The second house owned by her needs major renovations, and she has not decided to to those yet, so that house is not generating any income. We want her to sell it but she is refusing to do so. Jan Dear Jan, Your mother can probably take out a mortgage or an equity line based on the equity in the house. However, your sister won't be able to take any kind of deduction for the payments - for two reasons. To get a mortgage deduction on her Schedule A she must own the house (or at least be on title) and it must be either her residence, or her vacation home. So, if Sis makes the payments, I suppose she could treat is as a loan and get paid back from your mother's estate. No doubt, your mother doesn't need the deductions, since her medical expenses probably exceed her income. So, on that other house, unless you plan to rent it out to tenants....there is no financial or tax reason to do the renovations. After all, no one will use it, and it won't be sold anytime soon. The only way you're going to have to make repairs or renovations is if the neighbors or community or town insist because it is a dangerous nuisance. It's always a tough when you're dealing with someone that old, who is stubborn. But it may also be the approach you're taking with her. She's your MOTHER, not your child. Just because she looks old and frail doesn't mean that her sense of herself as your mother is gone. She doesn't want to be told what to do, even for her own good. She may be hanging on to that property for some measure of emotional stability or control. For some people, things like that are their anchor to their sanity. Remove it (sell it) and you destroy her mental comfort zone. So, please be careful. Try to discuss the issues with her - not tell her what must be done. Ask her opinion on the best way to handle the situation and offer her some alternatives. See if she has other ideas. LISTEN to her and find out why she is clinging to it. Of course, if she is in some state of dementia .... all logic will be out the window. Perhaps your mother is willing to put you and your sister on title. That might make it possible to deduct the mortgage costs. But I wouldn't take that route. You will lose the benefits of the estate tax laws that cause the tax value of the property to jump to fair market value at date of death. So, think through all your options carefully before you do anything. And don't be in such a hurry to deal with the property. Focus more on your Mom. (As I should) Best wishes, Eva Rosenberg Your TaxMama  |
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