Posted on: 28th Nov, 2007 03:38 pm
i am proceeding with a refinance of a home that my wife and i have been living in which my father-in-law owned, and we have been added to title. we have paid all mortgage liens, property taxes and insurance since moving in. we will be refinancing the home and then having my father-in-law quit claim the deed. i understand from previous posts that there will be no capital gains requirements, but he may/will have to report compensation toward lifetime gifting of $1,000,000. above and beyond paying off the 2 liens that he has on the house, he will be compensated an additional $62,000. can my wife and i gift him this money in installments in late december and early january? how does this work and what does this transaction mean to my father-in-law with regard to pay out on his part?
Hello Cbmwlynch,
Your father-in-law will get a $1 million lifetime gift tax exemption on his cost basis of the property and the $62,000 compensation amount is not included within that.
You may pay this amount to your father-in-law in installments, if he agrees to get it that way.
What is the value of his interest in the property at present? Are you buying him out for that portion?
Your father-in-law will get a $1 million lifetime gift tax exemption on his cost basis of the property and the $62,000 compensation amount is not included within that.
You may pay this amount to your father-in-law in installments, if he agrees to get it that way.
What is the value of his interest in the property at present? Are you buying him out for that portion?
Jenkin7,
He purchased the home in 1975 for $31,000 and owes approx. $87,000 on it now. My refinance will cover the payoff of his liens (2 ARMs) and $63,000 compensation to him
He purchased the home in 1975 for $31,000 and owes approx. $87,000 on it now. My refinance will cover the payoff of his liens (2 ARMs) and $63,000 compensation to him
Hello Cbmwlynch,
Are you planning to take a cash-out refinance since you are paying compensation to your father-in-law?
The refinance will be based on the present appraised value of the home as well as the equity in it. Have you already spoken to your lender about the refinance? What is the interest rate they are offering?
Are you planning to take a cash-out refinance since you are paying compensation to your father-in-law?
The refinance will be based on the present appraised value of the home as well as the equity in it. Have you already spoken to your lender about the refinance? What is the interest rate they are offering?