Topic Thread

1.  Guarantor of mortgage

Posted 10 days ago
Hi- I have a client who is a guarantor on a mortgage. The mortgage was additionally secured by a building that at the time of purchase was occupied by a rent paying tenant.  Subsequently the building has become vacant and thus no rental income.

The mortgage terms provide that the property be maintained and all insurance and real estate taxes be current.  The client as guarantor has lent funds to the partnership to pay the debts as well as upkeep the property.  There is no expectation that these loans will be repaid.

In 2016 the client (guarantor) lent approximately $125,000.  Can this amount be deducted on his 2016 personal return?  If so, which schedule would be the appropriate place to record it?

Thanks in advance for any advice on this matter.

Jay Gordon
Lynbrook NY

2.  RE: Guarantor of mortgage

Posted 9 days ago

I have the same situation and am happily involved with Mark Stone:


Mark L. Stone, CPA, MST

Managing Partner/member


Sales Tax Defense LLC

673 Deer Park Ave

Dix Hills, NY  11746


(631) 491-1500 ext 11 :phone

(631) 491-1515 :fax

Jacob Glick
Brooklyn NY

3.  RE: Guarantor of mortgage

Posted 8 days ago
Is the taxpayer a member of the partnership?  The deduction generally belongs to the entity (ex. interest).  The taxpayer may claim a Bad Debt Deduction under various factors which require further factual analysis.  See the regulations and cases under Section 166.  A business purpose or profit motive for the guaranty may be necessary.

Robert Barnett
Capell Barnett Matalon & Schoenfeld LLP