My daughter and I bought a house together in 2022. I contributed money for the down payment. We have paid equally all of the mortgage and expenses.

We are selling it now, it is on the market. I am not on the deed (one question, would it be better to put myself on the deed at this point for the division of proceeds?)

The question is taxes or penalties on her part as she is the mortgage holder. For her to give me my proceeds we are finding it difficult to get a clear answer, how best to have her not suffer tax consequences for transferring my portion of the profits to me?

The easiest way to do this please, and with her not suffering unnecessary taxes that we don't understand. Hidden costs for the wrong choices. Thank you in advance R.C.

  • 5
    What country are you in? Tax laws vary around the world.
    – TripeHound
    Commented Nov 25, 2023 at 20:40
  • 1
    Yes, this is very true. I am in Maryland, U.S.
    – Rita Cook
    Commented Nov 26, 2023 at 19:09
  • Given this is a legally important question and you have made some statements about your intent, I highly advise you to delete the post / at least change your profile name from being your full name. Talk to a lawyer. Answer given below is good. Commented Nov 27, 2023 at 15:17

1 Answer 1


As I've alluded in the comment (now deleted), the fact that you're not on the deed means you're not actually entitled to any proceeds from the sale directly to you. You have no ownership in the property.

There are a couple of possible scenarios, both may end up in criminal exposure (mortgage, insurance, other types of fraud - depending on the relevant documents and affidavits signed).

  1. You co-own the house with the person on the deed. In this case, you write to the escrow company how you expect the proceeds to be divided and they'll issue 1099S based on that. They may not accept your instructions given that the official title (the deed) disagrees. "Putting yourself on the deed" is a strange way to remedy the situation. First of all, it would be a deemed sale/gift from the co-owner to you, and there will be gift tax ramifications. Second, it will likely trigger an immediate demand from the bank to repay the mortgage.

  2. You provided assistance with the purchase (i.e.: lent the money for the downpayment), in which case you get nothing from the sale of the house, but you're entitled to demand the repayment of the loan.

For case #1 - the gains will be split based on the ownership division. I.e.: if you own equally - you get an equal share of the gains.

For case #2 - the gains go to the owner, you as a lender get interest for the money lent (based on whatever you agreed between you). Interest is not taxed as capital gains - it is taxed as regular income, on Schedule B. If you receive no actual interest, you'll be taxed based on deemed interest based on AFR, and if the amount is large enough you may end up on the hook for gift tax (return).

In both cases, during the purchase someone lied on a form (very likely under penalty of perjury). The purchaser either neglected to mention the downpayment as a gift, or a co-owner, on their mortgage (and subsequently insurance) application. I'm not a lawyer, but to the best of my knowledge that's a felony.

Any other transfer between your daughter and you will likely be treated as a gift, with gift tax ramifications. It may not actually cost any tax, since there's a pretty substantial lifetime exemption she'd tap into, but at least the gift tax return (form 709) would need to be filed.

You should consult with an attorney how to proceed.

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