Bad deals affected reader's credit record
The deals had repercussions when applying for a mortgage on a new home.
D
EAR HARRY: Back in 2011, I got into two bad deals that cost me my sterling credit record. They came back to haunt me when I applied for a mortgage on a new home now under construction. I tried any number of banks and other lenders, but got either a direct turndown or a loan with a rate that's way out of line.
My brother (a top honcho with a large drug manufacturer) has offered to borrow the $225,000 for me secured by the house. I will own the home and repay the mortgage directly. The builder's in-house lawyer advised me to make sure that the interest will be deductible on my tax return, because the loan is not technically mine. Help!
WHAT HARRY SAYS: The IRS tried to make the interest non-deductible by either of you. Your brother is out because he does not own the home. They tried to keep the homeowner out by insisting that the loan is not his.
The court did not like the IRS position because it allowed no one to take the deduction. It ultimately ruled that you, as owner of the home and repayer of the loan, should get the benefit of the interest deduction. Sometimes the IRS leans over backward in order to stand up straight, but the courts are on their tail.
Email Harry Gross at harrygrossDN@gmail.com, or
write to him at Daily News, 801 Market St., Philadelphia, PA 19107.
Harry urges all his readers to give blood. Contact the American Red Cross at 1-800-Red Cross.