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I purchased a house as a non-occupant buyer with Mom a year ago. It is her home. Good decision at the time for a few reasons and I put down the full down payment (20%). I am thinking that long term that it would be best if the house is fully under my name to reduce liability for both of us (she is 70+). I have the extra funds to pay it off and could get a 2nd mortgage later if needed.

Two questions:

  1. Would you agree with my assessment that it would be best if the house is only in my name to reduce liability? Her monthly payment will be lower and we would both still make money once it is sold.
  2. How do we go about transferring to my name 100% after I pay off the mortgage with no tax implications? Do we go to the county and transfer ownership?

thank you

  • I think that last part is where you will get fouled up. To my knowledge you can't just transfer a house from one person to another with no tax implications at all. Others here may be able to answer in more detail with regards to that, but I'd say you should consult a professional before you do anything. It may very well be best if she leaves the house (or proceeds) to you as part of her estate; or gifts you money each year from the proceeds if you chose to sell. – Keith Apr 29 '17 at 3:57
  • Appreciate the quick response Keith. I was thinking that once the mortgage is paid off, and the mortgage company submits a release to the county, a quitclaim will do. – user56063 Apr 29 '17 at 4:19
  • Of course, if your name is already on the deed, that may help. I couldn't really tell from your post if that was the case or not. – Keith Apr 29 '17 at 4:31
  • Have you talked to your lender about a streamline to remove your mother from the mortgage? I know that's a method to remove a non-occupant buyer from a mortgage, might also be used to remove the occupant buyer. Also, how would you both make money when you sold if it's only in your name? – Hart CO Apr 29 '17 at 4:51
  • Please specify the country: legal and tax questions require it. – mhoran_psprep Apr 29 '17 at 11:01
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If it's in your name and you don't live there, there's a number of issues. If you charge her rent, it needs to be at fair value to treat it as a rental property.

If she lives there for the next 20 years, it will (or we hope) gain value. If she passes while it's in her name you get to step up the basis, and avoid tax. If in your name , the gain would be taxable.

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Sit down with professional with knowledge about eldercare issues. Know how your options regarding the property ownership can impact the services they qualify for. Even making a change in ownership can impact their eligibility for certain programs. Some of which can reach back to events in the recent past. Also if you own it but she will get some of the profits when you sell, she could still be considered an owner, which can impact eligibility for programs.

This is in addition to the issues with the lender, the IRS, and your estate.

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