Reminder: No Deduction for Paying Someone Else’s Debts

In Lourdes Puentes, TC Memo 2013-277, the taxpayer’s brother purchased a home, later allowing the taxpayer to live in the property.  When her brother lost his job in 2009, the taxpayer “paid certain amounts owing under the mortgage loan, including interest.”  The taxpayer recognized that she was not the owner of the property, but thought she should still be entitled to a deduction for the mortgage interest which she paid because she was an equitable owner.

“No dice,” said the Court, because the taxpayer offered no evidence that she had any agreement with her brother entitling her to an ownership interest or any beneficial rights, such as the right to rents, the right to profits, the right to possession, the right to improve, or the right to purchase the property.