I live with my son and daughter. What are the pros and cons of adding them to my house title? or deed?

Question

I hear one pro is for refinancing, i can use their salaries. A con is they are now part owners. Are these true? My son is 21 with an excellent job and my daughter (27) and her family rents.

Answer 1

If you add them on to the title of the home you can use them for refinancing, but they would need to be listed on your mortgage loan as borrowers as well as yourself. You can not just simply use their incomes and not have them on the mortgage loan. This will affect their credit and if they ever want to move out it could affect their ability to get their own financing if they are still on your mortgage.
Yes if your son and daughter are added to the title they will become part owners and have ownership interest in the home. However, if you plan on giving the home to them through your will eventually anyhow, this will simply make the process that much simpler.
If your son or daughter ever have any tax liens, chargeoffs, judgments, etc... these could be added to the title of your home.
Although, having them on your mortgage could possibly help you qualify for a better mortgage and rate.

Answer 2

Complicated question and answer - depends on your situation and needs. Cons would usually outweigh the pros. Pros could be financing (or re-financing) if you needed to do that. Asset would also not be probated upon death if titled jointly. If there is equity in the home, you would lose some of the capital gains benefits of the asset being probated. Also does open up the child for liability purposes (somebody slips and falls on the sidewalk, they are now potentially liable). There are even potentially things with long-term care that could come into play. Talk to an estate or tax attorney - give them details on your situation and goals (if you have a will or trust, retirement income sources -will you want to use home equity, etc.) - they'll tell you how you should title your home to get what you want and the risks you may be taking along the way.

Answer 3

The other complication not mentioned by anyone is the potential for a Gift Tax liability on your part. You are allowed to give up to $12,000 per recipient per year without filing a Gift Tax return. Depending upon the value of the equity given away and your lifetime gifting situation there may or may not be any Gift Taxes due. Adding someone to your deed IS treated as a gift as far as the IRS is concerned.

You would generally be better off leaving the home to them in your will or setting up a trust with them as beneficiaries and transferring the ownership of the home to the trust. Either way could attract Estate Taxes, however the trust will bypass the probate process thereby simplifying the transfer somewhat.

Answer 4

You have basically answered your own questions. Othe things to keep in mind are:
1- If your kids are on the title, they must agree to and sign all sales paperwork if you ever decided to sell.
2- With them on title, they can put encumberances (mortgages, etc) on the title without your ok.
3- When you pass away, the property would become their's without having to go through probate.
4- It would eliminate them from first time buyer programs.

The pluses and minuses can keep going on and on. The best thing to do is to contact your CPA or other financial advisor. Because you then run into who gets to write off what in taxes,....

Answer 5

i am confuse but it does not take much to confuse me -- you own the house but you live with your son and daughter in law. looks like you should say your son and his wife moved into your house. if that is the case i would strongly advise not to put the title in their name. unless their is a very and i mean a very good reason why refinance. next if you add them both or even just your son to the title than the house or at least part of it is his/theirs. should they get a divorce (i know they are deeply in love and it would never happen) you might find you and your son living in a one bedroom apt.