^^^ That's nonsense. In one breath you say "Yup, it's a home"
Yes, I said that.
and agree that a home is the land and mobile home collectively.
I misspoke a bit in my first sentence in my previous reply. When I said it's a home, I was meaning to comment on the fact that a mobile home is a home - anything with a toilet, kitchen, and bedroom can be a home, as you pointed out later. I didn't mean to say that the mobile home plus the land was a home. My apologies for the mistake and the resulting lack of clarity.
Then you say that "the IRS says that the loan must be secured by the home" and that in this case it isn't deductible. I guess that you are saying that the collateral must be BOTH the land and the building in order to be deductible?
Again, sorry for the confusion. The IRS requires the loan to be secured just by the home, not the land, although in most cases the two are tied together (like with a more typical home).
and that one or the other isn't good enough?
Just the home is necessary, not the land.
I think we would agree that if someone bought an existing mobile home and the land it sits on and financed it that the interest would be deductible, right?
If the loan was secured by the home, yes.
Then what if you bought the land and mobile home in separate transactions, say one person owned the land and another owned the mobile home and you bought them and financed both, then I think we would agree that the interest would be deductible, right?
Only the interest on the loan that was secured by the home.
It's also well established that if you own a mobile home that is financed and the mobile home is collateral but sits on leased land that the interest is deductible, right?
Yup. Because the loan is secured by the home.
But if you do the two separate transactions, but finance the land and pay cash for the mobile home then it isn't deductible? Doesn't make sense.
Tax laws are frequently convoluted and inconsistent, I agree.
If I were the OP I would deduct it even if there is a little tax risk involved.
The language in the Schedule A instructions for deducting mortgage interest is quite clear; I quoted it in my initial reply but will quote a bit more (same link to Schedule A instructions for line 8):
"A home mortgage is any loan that is secured by your main home or second home, regardless of how the loan is labeled. It includes first and second mortgages, home equity loans, and refinanced mortgages.
A home can be a house, condominium, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations including sleeping space, toilet, and cooking facilities."
Given what OP wrote, I don't see how they can claim that the loan on the land is secured by the mobile home that sits on the land, because it simply isn't.
I do appreciate creative thoughts about how to interpret the tax rules and personally have no problem with taxpayers taking aggressive interpretations of tax law when they are unclear and the interpretation is reasonable. IMHO, the approach of tying the mobile home to the land in order to deduct the interest on the land loan goes too far for me to support. If OP came to the Tax Aide site where I volunteer and asked me to prepare their return in the way you describe, I would decline to prepare the return.
