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All Forum Posts by: Gregory Wilson

Gregory Wilson has started 2 posts and replied 177 times.

Quote from @Ashish Acharya:

@Justin Summers Yes, your mother can still claim the mortgage interest deduction since she holds legal title and makes the payments, even though the 1098-INT is issued to the prior owner. Ideally, the prior owner should issue a nominee 1098 to your mother and include a statement with their return noting her as the interest payor. If that’s not possible, your mother should attach a brief statement to her return explaining that she holds title and made the payments, while the 1098 was issued under the seller’s name. This creates a paper trail to support the deduction.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Just for clarification Ashish, here is a great AI explanation:

Legal Title vs. Equitable Title in Real Estate

Legal Title


Legal title represents the formal ownership of real property as recognized by law and recorded in official documents. Key characteristics include:



  • Formal recognition in public records (deeds, titles, registrations)
  • Right to control the disposition of property through sale, transfer, or encumbrance
  • Standing in courts of law to defend property rights
  • Power to convey the property to others through legal instruments
  • Name appears in property tax records and other official documents
  • Ability to grant mortgages, easements, and other legal interests

Legal title holders possess the formal "paper ownership" that is enforceable through legal action in courts of law.


Equitable Title


Equitable title represents the beneficial interest or right to enjoy and use property, even if someone else holds legal title. Key characteristics include:



  • Right to use, possess, and enjoy the property
  • Entitlement to any income, profits, or benefits derived from the property
  • Beneficial ownership interest even without formal legal documentation
  • Right to compel transfer of legal title under appropriate circumstances
  • Protected by courts of equity rather than courts of law
  • Often based on principles of fairness and intended ownership

Equitable title holders possess the actual beneficial enjoyment of the property, even if they don't appear as owners in legal records.


Common Situations with Split Title



  1. Land Contracts/Contracts for Deed: Buyer has equitable title while seller retains legal title until final payment
  2. Trusts: Trustee holds legal title while beneficiaries hold equitable title
  3. Real Estate Purchase Agreements: Between signing and closing, buyer has equitable interest while seller retains legal title
  4. Nominee Ownership: Legal titleholder acts as nominee for equitable owner
  5. Life Estates: Life tenant has equitable title to use during lifetime while remainderman has future legal interest
  6. Foreclosure Redemption Periods: Borrower retains equitable title during redemption period

Legal Significance


The distinction between legal and equitable title has significant implications in property disputes, tax matters, bankruptcy proceedings, and estate planning. Courts may recognize and enforce equitable title claims even against legal titleholders when equitable principles such as unjust enrichment, constructive trusts, or specific performance apply.


In summary, legal title represents formal ownership recognized by law, while equitable title represents the beneficial interest to use and enjoy the property. Both forms of ownership carry significant rights that courts will protect in their respective jurisdictions.


Quote from @Justin Summers:
Quote from @Gregory Wilson:

The correct answer is that the title holder/borrower deducts the interest and reports the interest income that mom paid to him and she issues the title holder/borrower a 1098.


 Mother bought the house and the loan is in prior owner's name.. Mother pays mortgage payment to bank monthly.  The 1098 is sent from bank in prior owner's name. Are you saying prior owners should issue mother a 1098? 

Your mom is paying land contract interest and principal to the owner. The manner of payment is by her discharging the owner's debt by paying the amounts owed to the owner to his bank. So mom should get a 1098 from the owner for her interest payment deemed to be made to the owner. And, since the interest is being paid to (for the benefit of) an individual and not a bank she should send the owner a 1099INT.

Quote from @Alan Asriants:
Quote from @Sam McCormack:
Quote from @Alan Asriants:
Quote from @Sam McCormack:
Quote from @Alan Asriants:

Do you have duct work in the property? If so, just add a condensor/compressor to the existing hot air furnace for central air. 


 Yes, but mini splits are still significantly more cost effective (to my understanding)


 If you have ductwork then no. If you don't then yes. If you have ductwork thats one compressor and condensor unit. If mini split thats 1 of those per unit/room


I will get quotes on this stuff of course, but I only need 2 mini splits. Like I said, small units (1bd, like 550 sqft)


 I really don't think they are that much more cost effective, probably less tbh than adding central air to duct work system. Also keep in mind that if you have a small unit, adding a ductless system takes up headspace and might make the place feel a little more cramped. I think just adding CA to your existing system is cleaner. 

This is a complicated topic. The ductwork for an old heat only system is unlikely to be correct for a central A/C system.Heat rises a/c falls. Return air for a heat only system is seeking cold air.
Also, the savings comes for people like me who want the bedroom at 65F when it is 90F outside but don't want the whole house or even a zone at 65F.

The correct answer is that the title holder/borrower deducts the interest and reports the interest income that mom paid to him and she issues the title holder/borrower a 1098.

You need to separate units inside and outside for two different apartments. But if it is two rooms of the same apartment you can get a two head unit with one outside heat pump.

I love the mini splits. Talk about "zone" cooling. They really work. I like them so much I put them in my personal residence. I got Mr. Cool for that and my son did a 4 head install in a week with one helper. So much for the $10k install quote I got from my best HVAC guy.

I was looking for a serious answer. Not a "well people can do whatever they want, can't they?"

Of course they can. But it our responsibilities as trusted professionals to guide them away from harm and loss.

In the last few years I have had people call me to find a qualified intermediary for all sorts of frivolous reasons including because they don't want to pay the tax on $1100 of long term capital gain. Another at $5800 of LTG.


Do you think it is ethical to not tell them it is not ok? Or, do you take their money on the "hey, its their decision" theory espoused above?

How about a serious answer.

If its a partnership you can allocate by agreement as long as the allocation is the same for book purposes as it is for tax. Note that if only one partner gets the deduction it has to reduce that partner's capital account or it will be deemed not to have substantial economic effect - the precondition of special allocations.

Quote from @Julio Gonzalez:

@Gregory Wilson 

Thank you for sharing your perspective—it's a valid point that a 1031 exchange isn't always the most practical route, especially when the potential tax deferral is outweighed by transaction costs and loss of flexibility.


Julio: Thanks you for you execellent post. Do you have a rule of thumb for a cut off point below which the 1031 will not be worthwhile?

I have had many people wanting to do a 1031 who simply do not qualify from a pragmatic standpoint because their deferral is not worth the transaction cost and restrictions.

I think it would be helpful for some qualified intermediaries to weigh in on what they think isthe threshold of suitability. For my part, I don't even send them to the 1031 guy if the gain is less than a couple hundred thousand. And, I don't much believe in 1031 deferrals as a strategy in the first place.