Dad buying new home and making me owner for tax benefits BUT I need to get house loan?

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My father and Uncle are jointly buying a secondary property. Both already have a primary residence, so they want my cousin and I to be joint owners of the house. I’m single and currently not a house owner, last year I paid over $ 25,000 in taxes so the savings for me could be substantial (also for cousin).

The intent is that my cousin and I will buy the house (but all money coming from parents). Unfortunately, my uncle just informed me that my cousin and I are the ones who need to get the house loan in order for us to claim deductions on next year’s taxes.

I had a few questions on which I would like some input from you guys:
1) Can there be a joint-owner of a primary residential property AND both of us able to deduct mortgage from taxes?
2) Can my cousin and I [primary resident owners] receive tax benefits without SIGNING the house loan. Don’t want my credit score to be hurt because our parents failed to pay.
3) Any other potential problems? Like if I want to buy a car or a house?

7 Comments
  1. Reply
    jbridger84
    April 30, 2011 at 12:16 am

    who cares californias gonna be underwater in a few years

  2. Reply
    therainbowseeker
    April 30, 2011 at 1:16 am

    only the owner(s) of a property can grant a mortgage interest in a property (receive a loan secured by the property).

  3. Reply
    alleykhad607
    April 30, 2011 at 2:15 am

    talk to a real estate lawyer
    before you get in to any deals involving family

  4. Reply
    mcmufin
    April 30, 2011 at 2:50 am

    Seek an attorney’s assistance before you do this. In reading your question, the first thing that came to my mind was that this is potentially tax fraud. The second thing that came to my mind was that was a recipe for a family disaster.

  5. Reply
    bob shark
    April 30, 2011 at 3:41 am

    doing shady stuff, usually ends up biting you in the A**.

    Is your father and uncle buying this house for your benefit, or are they trying to get an investment house by using you to participate in a fraud?

    If It was legal, Joint owners would claim tax benefits as a proportion of their interest in the property and payments.

    You can’t get interest deductions without paying interest.

    Are you and your cousin, buying this house from uncle and father? Will you make full payments of principal and interest?

    Find out what is really going on here, or your can have group family reunions in the slammer.

    Don’t P**S off the IRS

  6. Reply
    mld_public
    April 30, 2011 at 4:11 am

    Having a home loan, with a house that is not yours (deed not under your name), will not be good in the long run. If your father and uncle are even a couple days late on the payment, you will be the one paying for it.

    Also, if you do plan to buy a house in a few years, you will not be qualified for 1st time home buyer benefits. Your credit score will also decrease (30-100 points) because your debt-to-income ratio will change.

    Do not sign anything, unless you have your own real estate lawyer present. It will only cost you $ 600-$ 800, but will make your life more secure.

  7. Reply
    Andrew R
    April 30, 2011 at 4:41 am

    (1) The joint ownership would be you and your cousin. You and your cousin would be entitled to the tax deductions on the property.
    (2)You can not receive tax benefits on property you aren’t buying. If you do not sign the loan then you are not buying. Most people think that they are buying a house when in fact what they are doing is getting a mortgage from a lender that holds the house. It is like buying a car, until the car is totally paid and you receive the pink slip it really is not yours. The car can be repossesed at any time for failure to pay because it belongs to the lender.
    (3) If you want to buy your own house later it will appear to everyone that the house your dad and uncle had you buy is yours. You will face the secondary house problem. If you want to buy a car it will look like you are carrying property debt that would be taken into consideration in your ability to take on more debt…same for another house. If you want to use a first time buyer program forget it.
    The last thing is that your dad and uncle want to buy this house for themselves and you to qualify for it, hold the mortgage in your name… Are you going to live there? Are you going to pay the morgage payment as rent? If you are paying the mortgage as rent then you probably will be paying more than the going rent rate.Is this house next to the ocean because there is a real fishy odor about so much of this deal.
    If has so many ways that spell defraud and guess who would be at fault there.
    Your dad and uncle are not buying a house just because they want to have a house collection. They want to make some money off the ownership of this property. They could buy another house some miles away from the vicinity of their primary residence and not pay the secondary house mortgage penalty.
    Sorry to come on so strong about this because you are considering helping your family. It seems to you that you could gain love and money (tax return) from this transaction. You also have a feeling that this could turn out to be a bad situation or you wouldn’t be an asker here. You have been asked to be part of a fraud. You have been asked to use your credit and reputation. You family might be upset if you say no but you may earn their respect.

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