Posted on: 20th May, 2010 10:31 am
I am trying to find out the tax implications if my father purchases a home for me. Also, how easy/costly would it be to roll the house into my name in 1 year?
I am 37 yr old divorced mother to 4 children and living in Texas
First time home buyer
I was given a home free and clear but not in a neighborhood desirable for my children so I have it rented out to tenants for the last 3 years.
I have 603 Fico score. NO DEBT.
I was not able to get a loan through First American Mortgage Trust. They were very unprofessional!
My father has great credit, plenty of assets, and one mortgage on his primary residence in colorado.
I know my score will rise over the next year as I am working on it, but I need a place to live NOW. I'm looking at a foreclosure in the area.
My dad has agreed to help me but I'm not sure of the best way to go about it. Should he buy it as investment property or a 2nd/vacation home? How can he avoid capital gains taxes when he sells it to me?
I do plan to write a monthly check to him for the mortgage and have a lease agreement drawn up. I hope this will qualify as rental history as well as I currently have no rental history.
Thanks!
I am 37 yr old divorced mother to 4 children and living in Texas
First time home buyer
I was given a home free and clear but not in a neighborhood desirable for my children so I have it rented out to tenants for the last 3 years.
I have 603 Fico score. NO DEBT.
I was not able to get a loan through First American Mortgage Trust. They were very unprofessional!
My father has great credit, plenty of assets, and one mortgage on his primary residence in colorado.
I know my score will rise over the next year as I am working on it, but I need a place to live NOW. I'm looking at a foreclosure in the area.
My dad has agreed to help me but I'm not sure of the best way to go about it. Should he buy it as investment property or a 2nd/vacation home? How can he avoid capital gains taxes when he sells it to me?
I do plan to write a monthly check to him for the mortgage and have a lease agreement drawn up. I hope this will qualify as rental history as well as I currently have no rental history.
Thanks!
You can apply for a FHA loan and your father can be the co-borrower of the loan. Once your credit score improves, you can refinance the mortgage in your name. Thus, your father won't have to sell the property to you and thus he won't be liable for the capital gains tax.
You both can be on the loan. He will be treated as a non occupying co-borrower.
No, I don't want to be on the loan becuase I've been told the lender looks at the person with the lower score. My mortgage guy did not even try me with my father as a co-borrower. Would that have helped?? If so, I'm even more angry that I missed the tax credit.
I am interested now in my father buying the home for me. Then isn't there something called a living estate or something where he can add me to the deed so I can homestead the house for tax purposes? Then in a year, I want to finance the house into my name.
Would this work and what would the pro/cons of this be? He would get a much better rate and closing costs than I would right now. Even if I did get my credit to 620, I'm still right on the line and would not get a good deal anywhere.
The house I'm currently living in belongs to my ex mother in law. My ex husband was very dishonest with me and so I got the house for a year rent free in the divorce. Both ac units have broken recently and I can't put 2300 into a home that is not mine to fix. So it's important I get out!
I am interested now in my father buying the home for me. Then isn't there something called a living estate or something where he can add me to the deed so I can homestead the house for tax purposes? Then in a year, I want to finance the house into my name.
Would this work and what would the pro/cons of this be? He would get a much better rate and closing costs than I would right now. Even if I did get my credit to 620, I'm still right on the line and would not get a good deal anywhere.
The house I'm currently living in belongs to my ex mother in law. My ex husband was very dishonest with me and so I got the house for a year rent free in the divorce. Both ac units have broken recently and I can't put 2300 into a home that is not mine to fix. So it's important I get out!
If he owns a home already, this purchase will be treated as a investment property or second home depending on the distance and will require a much larger down payment. By him being a non-occupying co-borrower, you would be able to put down less and it would be considered your primary residence. The difference in rate would only be a .5%
You probaly can not be on any mortgage because your credit score is below 620. Someone may do an FHA mortgage with a score below 620, but not easy to find and not likely and if you find them they will know they are the only game in town and the terms will not be favorable.
Dad should not really purchase it as a second home because it is not a second home unless it is by some resort or vacation area or golf course or some other valid reason to call it a second home. If there is a valid reason, do it as a second home.
Dad should purchase it as an investment property. You should be on the tilte/deed, just not on the mortgage. Then if you ever go to refinance , you are already an owner and will not run into quitclaim deed and title seasoning problems later on. Also, if anything bad happens to Dad, you are already an owner.
If you pay Dad rent, keep the cancelled checks to establish 12 months or more on time housing payments. Dad can either keep the rent money or give the money back to you.
Dad should not really purchase it as a second home because it is not a second home unless it is by some resort or vacation area or golf course or some other valid reason to call it a second home. If there is a valid reason, do it as a second home.
Dad should purchase it as an investment property. You should be on the tilte/deed, just not on the mortgage. Then if you ever go to refinance , you are already an owner and will not run into quitclaim deed and title seasoning problems later on. Also, if anything bad happens to Dad, you are already an owner.
If you pay Dad rent, keep the cancelled checks to establish 12 months or more on time housing payments. Dad can either keep the rent money or give the money back to you.
