Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm in my 30s and I currently stay with my parents. I chip in with the major bills but I don't pay rent. My dad is pressuring me and wants my information so I could be listed as part-owner of the house. He says this will benefit me. Any downsides I should watch out for?
I'm in my 30s and I currently stay with my parents. My dad is pressuring me and wants my information so I could be listed as part-owner of the house. He says this will benefit me. Any downsides I should watch out for?
What are his reasons for wishing you to be part owner of the family home? Do they own the property free and clear?
It's hard to answer this question without those details.
What are his reasons for wishing you to be part owner of the family home? Do they own the property free and clear?
It's hard to answer this question without those details.
He still pays the mortgage/rent. It's a 2 family house. The tenants pay rent which he uses towards the mortgage. He said having my name as a part-owner will benefit me because the house would be in my name. Like listing someone as a beneficiary. My parents are in their 70s.
This is one way to pass his equity in the house to the co-owners if he should die. He still owes the mortgage though and if he dies the mortgage company might not accept you and cause you to re-apply.
He still pays the mortgage/rent. It's a 2 family house. The tenants pay rent which he uses towards the mortgage. He said having my name as a part-owner will benefit me because the house would be in my name. Like listing someone as a beneficiary. My parents are in their 70s.
Because your parents are still carrying a mortgage on the house, it might be wise to pass unless you get a heck of lot of more information **in writing** from not only your parents, but a real estate lawyer *and* the company who holds the mortgage to the family home.
I only say this because should they die before you do, there's no guarantee that the mortgage will pass directly to you. As co-owner, you would likely be liable for any taxes as well. If your state has discounted taxes for senior homeowners, those taxes could shoot up right after their death, making you liable for them. If you have the financial means to handle any major tax/mortgage payment increases, it might be worth it, but I'd make darn sure that if you decide to accept this arrangement, to cross all every "i and q" before signing anything.
Your father should get legal advice before gifting you part of the house. By gifting you the house while your parents are alive, you would then be required to use their basis for tax purposes going forward. If you were to inherit the house, you would get to use the stepped-up basis. So...taking the house now as a gift could cost you thousands of dollars in capital gains taxes down the road. That happened to a family that I know. The mother gifted them the house while she was alive (without reserving a life estate) so when the mother died they were stuck with using her basis in the property when they sold. In their case, it cost them over $100,000 in taxes which could have been avoided.
Now, there are ways to avoid such a costly result, but your family needs legal advice from a good real estate or elder law attorney to do it correctly.
Your father should get legal advice before gifting you part of the house. By gifting you the house while your parents are alive, you would then be required to use their basis for tax purposes going forward. If you were to inherit the house, you would get to use the stepped-up basis. So...taking the house now as a gift could cost you thousands of dollars in capital gains taxes down the road. That happened to a family that I know. The mother gifted them the house while she was alive (without reserving a life estate) so when the mother died they were stuck with using her basis in the property when they sold. In their case, it cost them over $100,000 in taxes which could have been avoided.
Now, there are ways to avoid such a costly result, but your family needs legal advice from a good real estate or elder law attorney to do it correctly.
EXACTLY.
One more comment: You've only said your father wants to do this. What about Mom?
So I reached out to my CPA. She stated that since my dad is still paying the mortgage and taxes I'm fine. Also, in the future, if I get the house I won't be on the hook if I sell the house. I was informed that the taxes and mortgage is merged together so I should be able to pay it if I decide to. Also, like I said prior, it's a 2 family house. So I would have the option of renting out the 1 family house.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
