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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121313  
Subject: Re: Mortgage interest Deductions Date: 2/15/1999 2:15 AM
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[[4 years ago my sister, Dad and I bought a house. For the past 4 years we've
split the mortgage interest 3 ways and wrote that off for each of our taxes. My
portion was about 10K/yr. The IRS has the address of this house as my main
address.]]

Ok...if you all lived there together as your principal residence...no problem. But if only one of you lived there, it is very likely that the other two owner's interest deductions are limited...or should have been limited. But that's not your question, so I'll move on.

[[ This year, I bought my own house.]]

Congrats...

[[ Now my dad is paying the entire mortgage on the 1st house and I don't want
(can't) to take deductions on that property anymore. My name is still on the
house, nothing has changed]]

Well, you also have to be on the MORTGAGE in order to get the deduction anyway...the home ownership is only one piece to the puzzle. And it sounds like you guys have complicated things pretty well as it is.

[[ I won't take the mort. interest deduction for the 1st house anymore, because
now I have a mort. deduction from my new house.

My question is: Since I will have a new address on my tax return and since the
mortgage interest deduction changed (now 15K), will this red flag anything for
the IRS?]]

Not necessarily....but it could be a problem if the IRS can't track the disposition of the "old" property. The IRS doesn't look and compare from one year to the other. Each year stands alone. But make sure to complet an IRS change of address for to notify them of your change of address. You can find this form at the IRS web site.

[[ I ask because I read in the E&Y tax book that one obvious red flag
was having a mort. interest deduction w/ change of address and not showing a
sale of the old property.]]

This is true...to a degree....just like I noted above. So while it may increase you audit exposure, it may not necessarily guarantee an audit.

[[ Will putting my new address on my federal & state tax returns nullify my need to
submit a change of address form?]]

Yes...but the change of address form works faster and better. So I would suggest that you use it.

[[ Is a change of address that big a deal to the
IRS???]]

Yup...they need to keep track of you if or when they have tax issues that they want to discuss with you. And not only that, there are certain items that they may have to mail to you that are requried by law to be forwarded to your last known address. So the change of address for is really for YOUR protection.

TMF Taxes
Roy

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