Posted on: 01st Dec, 2009 11:16 am
Hi,
I co-signed on both the property deed and the mortgage when my daughter bought her house in April of this year (House A). She made the down payment and she pays the mortgage dues to me and I make the payments to the mortgage company.
Since I want to buy a house for myself after New Year (House B), I need to free up my credit now tied down by the mortgage on House A. That I can do only by listing House A as a rental on my tax return, with her mortgage payment as my rental income and the interest, taxes and insurance as expenses. That way the mortgage expenses held against me for House A is offset by income.
When I have bought my own House B, I want to quitclaim or sell my share of House A to my daughter, so that I will not have to pay any capital gains tax on it down the road. What is the best way to do this? Quitclaim (and file a Gift Tax Exemption form) or sell my share to her? I don't know what such a sale would look like, since I don't own a specific share of House A, and my daughter made the down payment. Even if I sell it for $1, will the IRS figure I owned 50% or it, and use current market value as basis?
(By the way, I'm not worried about remaining on the title for the mortgage of House A after I have bought house B)
Any advice or comment is greatly appreciated!
Jim
I co-signed on both the property deed and the mortgage when my daughter bought her house in April of this year (House A). She made the down payment and she pays the mortgage dues to me and I make the payments to the mortgage company.
Since I want to buy a house for myself after New Year (House B), I need to free up my credit now tied down by the mortgage on House A. That I can do only by listing House A as a rental on my tax return, with her mortgage payment as my rental income and the interest, taxes and insurance as expenses. That way the mortgage expenses held against me for House A is offset by income.
When I have bought my own House B, I want to quitclaim or sell my share of House A to my daughter, so that I will not have to pay any capital gains tax on it down the road. What is the best way to do this? Quitclaim (and file a Gift Tax Exemption form) or sell my share to her? I don't know what such a sale would look like, since I don't own a specific share of House A, and my daughter made the down payment. Even if I sell it for $1, will the IRS figure I owned 50% or it, and use current market value as basis?
(By the way, I'm not worried about remaining on the title for the mortgage of House A after I have bought house B)
Any advice or comment is greatly appreciated!
Jim
Hi Guest,
You can transfer the property to your daughter by signing a quitclaim deed and she can then refinance the mortgage in her name. Thus, while you apply for a loan for buying your new property, you won't have to show the other property as rental. As far as gift taxes are concerned, there are certain exemptions. Check out the given page to know more:
http://www.mortgagefit.com/gift.html#111114
You can transfer the property to your daughter by signing a quitclaim deed and she can then refinance the mortgage in her name. Thus, while you apply for a loan for buying your new property, you won't have to show the other property as rental. As far as gift taxes are concerned, there are certain exemptions. Check out the given page to know more:
http://www.mortgagefit.com/gift.html#111114
jim, by not being worried about being on title to house A after buying house B, you contradict all of what you had noted earlier. why bother worrying about transferring ownership to your daughter if you don't care about transferring ownership to your daughter? did i miss something special in this?
