mortgage

Late on mortgage payments, name not on docs

Judy O'ConnorDear Tax Talk,
After my wife passed away in 2008, leaving no will or power of attorney, I kept up the mortgage payments until I became hospitalized and fell behind. I now know that my name doesn't appear on the mortgage at all and the lender refuses to even talk to me. I have filed tax returns taking the paid interest as a deduction and paid insurance on the property. Now it seems I'm going to be foreclosed upon and the IRS is after me for "their" money. Am I doomed?
-- Rich

Dear Rich,
Unfortunately, the Internal Revenue Service is correct under these circumstances and you are not going to be able to deduct the mortgage interest that you have paid on behalf of your deceased wife. Because your name does not appear on the mortgage documents, according to the IRS you were not legally responsible to pay for it. In order to be able to take the deduction, not only do you have to make the mortgage payments, you must be named on the mortgage as well.

A little estate planning goes a long way. Most of these issues could have been avoided if you had consulted with a professional prior to your wife's passing. Please keep this in mind for the future if you have any property you would like to leave with relatives or to charity. As far as working out the foreclosure situation with the bank, you may want to consider having an attorney assist you on this matter. Hopefully, the bank will be willing to work with you since you have continued to make mortgage payments on the property.

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