Feb 12, 2010 from
Anonymous
Value
$0.00
My brother has a settlement from a traffic accident and pays no income tax. He has house payments which include $18,000 per year in interest. He can not deduct because he pays no tax, how can he get this deduction?
I've already tried...
nothing
Answers
About the Expert
I have been doing taxes since 1977. I worked 5 years for the IRS as an auditor and group manager. View Profile
He can file a tax return and take the deduction but as he has no taxable income there will be no benefit to the deduction. Unless he generates taxable income he cannot get a benefit for this deduction unless the house is a business house and then the deduction could generate a net operating loss and he could possibly carry that loss to other years when has has taxable income.
Another way to generate a deduction that can be used for tax purposes is if someone who has taxable income bought his house and paid the interest and then your brother paid the new owner rent. The house would then be a rental property where the owner could deduct the interest. Your brother, however, would get no direct benefit from paying rent.
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