My Dad is going to sign over his house to me and my husband. He lives there now, we do not. My husband and I want to know how long will it take to get a loan against the house to buy another house? Do we have to live in my Dads house in order to get a loan against the house? Later, my Dad will live with us and we all will visit that house in summers and a house in Florida for winters. Can this be done? How long for loan?

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    Did you call a bank? It probably depends on the efficiency of the propery appraiser.
    – Pete B.
    Aug 2 '16 at 15:23

You will own a property that will be a second home for you. Yes, that house will then be eligible for you to borrow against. There's no 'holding period' requirement. But there are a few issues with this plan.

  • No, people take loans against their second home all the time.
  • Dad is still there. It will look to the bank and appraiser as if it were a rental. Be prepared to explain, if asked.
  • I assume the house is worth more than $28K. This means that a form 709 is required to declare the gift and be applied against his $5m+ lifetime exclusion.
  • But. The impact of this "gift" is that you get his cost basis. i.e. when you sell it, your cost is what he paid plus documented upgrades. If it stays in his name till he passes, you get a stepped up basis. This may not be a big deal. Just a warning as I've seen a house gifted over the generations and when sold, a million dollar home had a $990K gain, which was all taxable. And all avoidable, had the last gift not been made, just transferred after the owner died.
  • As member user11599 notes in the comments, there is a Medicaid lookback period during which time, your father would become ineligible for Medicaid as the government treats that money as transferred to avoid nursing home costs. If he's more than 5 years from possibly needing this care, this is actually a reason to make the transfer sooner than later.
  • I don't know about Florida, but in a lot of places you can simply add you to the house as an owner without removing himself and it is no longer a gift. Plus no inheritance taxes.
    – corsiKa
    Aug 2 '16 at 19:20
  • @corsiKa - your should offer the details of this in an answer. I'm unaware of this process. Aug 2 '16 at 19:30
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    I might look into doing that. My wife is on several properties of her parents for this reason, so getting ahead of that problem now would be wise, I suppose.
    – corsiKa
    Aug 2 '16 at 19:36
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    Someone who knows more about this than I do should comment, but you should be really careful of the Medicaid lookback period. If there is a chance that your father could run out of assets in the couple years past when he transfers the house and needs to use Medicaid, the transfer could cause real headaches.
    – user11599
    Aug 3 '16 at 5:28
  • Almost certainly not a worry in this case, but also beware if there is a chance that your father might go into bankruptcy in the year after the transfer that the bankruptcy trustee might go after that asset. This would be very bad if you had taken a mortgage out on it. I'm guessing that this is not an issue in this particular case.
    – user11599
    Aug 3 '16 at 5:33

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