topic Co-borrower home out of state in Deductions & credits

Co-borrower home out of state

csambitions — Wed, 11 Jan 2023 18:20:17 GMT

Hi, I am helping my friend co-borrow a home in Oklahoma, he will be making the mortage payment and down payment, as this will be his primary residency. I still reside in California, I just wanted to confirm the tax implications to me if I am doing nothing but being a co-borrower.

Re: Co-borrower home out of state

xmasbaby0 — Wed, 11 Jan 2023 20:27:21 GMT

Do you really mean you are co-signing for the mortgage? So that if your friend defaults on the loan and does not pay, you are held responsible? There is nothing to enter on a tax return about that----unless at some time in the future you get put on the hook and have to start making the payments. Then you could enter the mortgage interest and/or property taxes you paid on your own tax return.

Re: Co-borrower home out of state

csambitions — Wed, 11 Jan 2023 20:31:42 GMT

Correct, instead of a co-signer, I will be co-borrower so I have ownership of the home in the event that he defaults and I end up making payments, I will still have partial ownership of the home.

Re: Co-borrower home out of state

TomD8 — Wed, 11 Jan 2023 21:05:42 GMT

As a co-owner (meaning your name is on the deed), you'll be entitled to deduct whatever share of the property taxes and mortgage interest you actually pay. When the house is eventually sold, you'll be on the hook for your portion of any capital gain tax, based on your percentage of ownership in the property.