How can I buy my daughter a house without tax issues?

Question

Say we are both on the loan but I pay the down payment. Can she own 99% of the deed without any tax issues?

Answer 1

The deed determines the ownership of the house, so I'll assume that the deed will show the daughter having 99% ownership of the house. On paper, then, the daughter should pay 99% of the loan payments, so that if you are paying any part of that 99%, it's a gift from you to her. If it's less than 11,000 a year, then it's tax free. Do you have a wife? If you do, you can increase this to 22,000 a year tax free. If your daugher has a husband, then this can be increased to 44,000 a year tax free, even if your daughter alone still retains 99% ownership of the house. Finally, there's the unifed tax credit, which is how much you can give away without taxes while living, I believe it's up to 1,000,000 for you, and another 1,000,000 for your wife if you have one. If you've already used this up or don't want to dip into this, consider a simple loan to your daughter, whereby the payments you make on her behalf are simply added to the principal of this loan, and AFR interest charged, roughly 5% a year, so that when SHE finally dies, her estate will owe you or inheritors the balance of that loan. These options doesn't exhaust the possibilities, but a lot more information is needed to construct something. Get a good tax lawyer.

Answer 2

But the house in a single member LLC that you own. Then gift her $12,000 worth of the LLC each year until she owns 100% of that entity. The $12,000 is the annual gift allowable without you paying a gift tax. Your daughter will have to live in the house.
Also you can give her a house worth up to $1,012,000. without paying any gift tax currently. This will use up your lifetime gift exclusion and if your estate is greater than $2,000,000 you could have an estate tax when you die.
You should also look into setting up a Qualified Personal Trust that could cut down on the amount of the gift you would be making .
Contact a good CPA to explore this further.