Mortgage from Parents

[Mike Lee]

Hi All,

I was hoping someone could help me out with the following question. I am in escrow and have talked it over with my parents to obtain a mortgage from them for my condo.  Can someone point me to the right direction on what needs to be done in terms of IRS tax purposes on going forward basis.  This is what I have been able to gather so far.

1. Agree to term based on the IRS guideline http://www.irs.gov/pub/irs-drop/rr-15-03.pdf

2.  Sign a contract and keep a copy

3.  Parents report the interest income and I report the mortgage interest. 

Thank in advance, any help is appreciated!

Mike

[Andy Mirza]

@Mike Lee Yes, your escrow should be able to prepare documents for you. The Note contains the details of your loan. The escrow company will most likely have a general template for a Note which may or may not work for you. You might have to search the Internet or an office supply store (like Staples) to find a Note that you like better. The Deed of Trust is the security instrument that is recorded to place the lien on your property. These are pretty standard and whatever the escrow company has should be acceptable. The Note needs to be signed by all borrowers. The DOT needs to be signed and notarized and your escrow company should be able to handle this as well.