My mother in laws house is in a life estate with my wife and her sister the beneficiaries at her death. The real estate taxes on the house have been deferred for years and there is now a large balance that the town is charging 8% interest on. Is there a better way to handle this than just adding to this balance and adding to the interest every year ? My wife could pay this off with no problem but sister in law cannot afford anything. Is there any way we could get a tax deduction for this or some way to stop paying 8% to the town and use it to our advantage??
USA real estate taxes on life estate house
- Thread starter Nugget
- Start date
Let's ignore what CAN happen and look at what WILL happen first. What WILL happen when mother in law passes is your wife will STILL be able to pay her share of tax and interest and her sister will STILL be unable to do so. - Bottom line: your wife is going to have to foot the whole bill anyway this turns out.
As far as deductibility goes, keep in mind that only interest from certain mortagages is eligible for deduction. So no deduction for this 8%. So now I'd advise you to get some qualified tax planning help to see what you can do about all this. Do this now while Mother in law is still alive because once she passes, your options to make tax saving moves (maybe you buy her house to get the property tax deduction??) vanishes and it boils down to now just having to pay the tax and interest.
As far as deductibility goes, keep in mind that only interest from certain mortagages is eligible for deduction. So no deduction for this 8%. So now I'd advise you to get some qualified tax planning help to see what you can do about all this. Do this now while Mother in law is still alive because once she passes, your options to make tax saving moves (maybe you buy her house to get the property tax deduction??) vanishes and it boils down to now just having to pay the tax and interest.
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