My wife and I divorced in 2014 after 27 years and we both moved out of the house and I surrendered the keys to the mortgage company and they winterized the house waiting for the sheriffs sale, we had filed bankruptcy 7 years prior and did not reaffirm the loan but we continued to live in the house and make the monthly payments until the divorce and she surrendered all rights to me so I could turn it over to the mortgage company which I did but she filed bankruptcy again the day after the sheriffs sale and the judge froze the transfer from my name to the new owner for two years so the house set empty and I was liable for maintenance. The property was transferred out of my name in February 2016 and I received a 1098 this week showing I paid 9800.00 in interest in 2016 when my last payment was in 2014 so I called the mortgage company to ask how it was paid and they said that it was paid from the sheriffs sale and the house was still in my name and the account was still open so I received the 1098 showing I paid the mortgage interest. Am I allowed to claim the mortgage interest on my taxes if I did not pay it directly?

You can still benefit from the tax deductions associated with home ownership. you may have not seen the money, but since you got the 1098 in your name, then in the deal (short sheriff ?s sale) you were credited with having paid the interest.