03 Feb Procedure to Claim Mortgage Interest Deduction for Taxpayer Who is Not a Debtor or Co-Debtor
The Treasury issued on January 30, 2018, the Internal Revenue Circular Letter No. 18-01 to establish the procedures and documents required to claim the deduction of mortgage interest paid or accumulated by a person other than the mortgage loan debtor or co-debtor. To be eligible for this deduction, the payment must have been made on a mortgage loan secured by the taxpayer’s qualified residence and the following documentation will be required:
- Informative Return – Mortgage Interest (Form 480.7A): issued by the mortgage loan debtor or co-debtor.
- Evidence that the taxpayer is the legal owner of the qualified residence or the person who would suffer the damage of a foreclosure, as applicable. For the last, a Sworn Statement should be acceptable as evidence, and the publication provides an example, click here to access it (in Spanish).
- Evidence of all the payments directly made to the issuer of Form 480.7A (copies of cancelled checks, money orders, etc.). Evidence of payment made by direct deposit or electronic transfer is acceptable. However, evidence must illustrate the mortgage loan number in order to be accepted.
- Evidence that the mortgage loan debtor or co-debtor did not claim the deduction by issuing a Sworn Statement including the name of the taxpayer who issued Form 480.7A, the mortgage loan account number on which the deduction is requested and a statement from the mortgage loan debtor or co-debtor indicating that he/she did not claimed the deduction. The publication provides an example of the referred Sworn Statement, click here to access it (in Spanish).
- Tax Return Electronic Filing Confirmation Sheet, as applicable.
If the taxpayer is required to file their income tax return electronically, the documents listed above must be sent, no later than 30 days after the electronic filing, to firstname.lastname@example.org. For the taxpayers filing their tax return on paper, the documents must be included together with their income tax return.
Failure to submit the required information will lead to a deduction denial and the income tax return will be considered incomplete, which could result in the assessment of penalties for late filing.