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Paying a Relative’s Mortgage

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Good on you for helping someone in need by covering their mortgage payment, but be a smart philanthropist. No one will get any deductions for those payments if you directly pay the lender unless you’re listed on the deed.

To increase the chances that someone snags the deduction, make a gift of the money to your parent or other beneficiary and let her be the one to pay the bills — although you won’t get any tax benefit unless you can claim her as a dependent. Treating a relative who doesn’t live with you as a dependent means meeting certain requirements. For instance, you need to have a certain type of relationship with the person and the relative must pass a gross income test.

Also, remember that there’s a limit on the amount of money you can give someone in a year — $14,000 — without incurring a gift tax. If you exceed the annual total, you may have to pay the tax.

If your neighbors, coworkers, family or friends are looking to buy or sell, your referral is much appreciated.

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