I'm having my dad get a loan on a house I want. I will be living in the property and making all mortgage payments (My name will NOT be on the deed - as of right now there's no chance for my name to be on the deed). I can have this property paid off pretty soon, once its' paid I want the house put in my name. Even though I'm the one that paid for the house, if it's put in my name.. will we have to pay a gift tax or capital gains tax on the transfer?
2007-01-19 05:30:58 · 2 answers · asked by Mic B 2 in Business & Finance ➔ Renting & Real Estate
I don't believe there will be a tax because the transfer will be for no money however when you sell the property you will owe capital gains if the profit is over $250k for single or $500k for married; since you will be purchasing it for nothing all of the sales price will be taxed over these limits. You should consult a CPA to verify.
2007-01-19 05:40:52 · answer #1 · answered by tianaramal 4 · 1⤊ 0⤋
You should get the mortgage in your name and have your dad co-sign for the loan, so that your name will appear on the title when the note is paid for. Otherwise, when your dad transfers the house to you, you will have to pay taxes on the value of the home as income, even though it was you who paid off the house note.
If you follow my advice, you will have direct access to the equity of the home with no income tax penalty because it is money from a home equity loan instead of income from earnings.
2007-01-19 13:41:09 · answer #2 · answered by Q 6 · 0⤊ 0⤋