Lets say I take out a mortgage to buy a house, and I'm the only borrower on the loan. My girlfriend's dad gifts me $125k to pay the down payment. She and her parents go on the title, along with me.
Then I pay $1600 in mortgage payments (PITI; $1229 to PI) per month. My girlfriend pays a $550 share to me, and we sublease a room to a friend for $450 as well.
Obviously, I have to count the friend's payments of $450 as rent. This goes into my AGI (adjusted gross income), if I understand correctly from IRS Publication 527. However since my girlfriend is on the property title, and her parents paid all of the down payment, why should her payments be considered rent?
True, the loan is in my name only, but that was only done because she is recently self-employed, and her credit score of 690 would bring up the rate. But she is a co-owner of the house, being on title, and therefore can't rent there, right?
Or is it considered that because I'm the only one responsible for the mortgage, therefore the mortgage is my expense, and anyone helping me with that expense is therefore paying rent?
I'm just worried because I'm on an income-based repayment plan for my student loans, and if I must count this payment as rent, it's going to make it look like I'm earning a lot more money than I actually am, and my student loan payments could go WAY UP because I would no longer qualify for income-based repayment. In that scenario, actually my loans would increase by $350 a month! In which case I might as well let my friend live here for free, just about!
What should I do? Just back out of the house and not buy it after all? (Still could back out at this point.)