Posted on: 17th Aug, 2010 12:56 pm
my wife and her brother own a rental property together. we would like to have him quit claim off the deed so we can refinance it in our names(better credit)so we can get a good fixed rate.
he is afraid that it will trigger a reportable event and he will have "income" from depreciation recapture and debt forgiveness. can we get a nortarized contract stating that the quit claim is for purposes of refinancing only and that he is still an owner/partner in this rental. afterwards we plan on having him added back on the title.
his other concern is that he will not be on the loan and that this will flag him with the irs when he tries to claim the interest mortgage deduction share.
i think we can prove that he is part owner and entitiled but would a novation to add him be of any benefit? please help clarify...
he is afraid that it will trigger a reportable event and he will have "income" from depreciation recapture and debt forgiveness. can we get a nortarized contract stating that the quit claim is for purposes of refinancing only and that he is still an owner/partner in this rental. afterwards we plan on having him added back on the title.
his other concern is that he will not be on the loan and that this will flag him with the irs when he tries to claim the interest mortgage deduction share.
i think we can prove that he is part owner and entitiled but would a novation to add him be of any benefit? please help clarify...
Hi Jerry,
You can let your wife's brother stay on the property deed and simply add your name to the property deed by asking them to sign the quit claim deed. Once your name is added to the property deed, you and your wife can refinance the loan in your names.
However, it is true that once you remove your wife's brother from the mortgage, he won't be able to claim the tax deductions.
Thanks
You can let your wife's brother stay on the property deed and simply add your name to the property deed by asking them to sign the quit claim deed. Once your name is added to the property deed, you and your wife can refinance the loan in your names.
However, it is true that once you remove your wife's brother from the mortgage, he won't be able to claim the tax deductions.
Thanks