In the instant case, petitioners' agreement with Haluk and Aysun coupled with petitioners' continued occupancy of the Alisal property and the performance by petitioners of all of the obligations under the Alisal property mortgage are sufficient to render petitioners' obligation to pay off the mortgage, an enforceable debt, to Haluk and Aysun for the amount of the mortgage at the interest rate specified in the mortgage. See
Amundson v. Commissioner [Dec. 46,697(M)], T.C. Memo. 1990-337;
Belden v. Commissioner [Dec. 50,802(M)], T.C. Memo. 1995-360. On this record, the Court finds that the mortgage payments made by petitioners to Southern California Federal with respect to the Alisal property were, in effect, payments of principal and interest to Haluk and Aysun. See
id. In other words, the payments by petitioners constituted payments on an indebtedness of petitioners.
To be sure, as required by section 1.163-1(b), Income Tax Regs., the taxpayer must be the "legal or equitable owner" of the property. Where the taxpayer has not established legal, equitable, or beneficial ownership of mortgaged property, this Court has disallowed the taxpayer a deduction for the mortgage interest. See
Bonkowski v. Commissioner [Dec. 30,469(M)], T.C. Memo. 1970-340, affd. [72-1 USTC ¶ 9332] 458 F.2d 709 (7th Cir. 1972);
Song v. Commissioner, supra.
Legal title to the Alisal property was held in the names of Haluk and Aysun during 1992. Nevertheless, since the time of the purchase of 1379*1379 the Alisal property, petitioners have made each and every mortgage payment on the property and have paid all expenses for repairs, maintenance, and improvement in connection with such property from their own income. The real property taxes and insurance on the Alisal property were paid from an escrow account at Southern California Federal that was funded with a portion of petitioners' mortgage payments. Furthermore, petitioners and their children have been the sole occupants of the Alisal property since the time of its purchase in 1990.