Greetings, My dad will buy a house soon and will put my name as owner. Will this affect my own 2017 taxes/refund? He will be making all payments but with my name as owner.

[SweetieJean]

Who will be living in the home?  Will Dad also be listed as an owner?

[TomYoung]

I don't see how this will affect your income tax return.  You won't get any tax deductions for mortgage interest and property taxes since you're not making the payments and, presumably, aren't on the mortgage.  You father will get those deductions.

He's making a gift to you and probably should file a gift tax return - Form 709 - but won't pay any gift tax.

[SweetieJean]

Whose name is on the mortage?

[rjs]

Putting the parent's house in the child's name is often a bad idea that will cost you thousands of dollars in additional taxes when you eventually sell the house some day.

You might also be getting yourself into a problematic situation with the mortgage and real estate taxes. The lender is not likely to make a mortgage loan to someone who is not the legal owner. That means that the mortgage will be in your name. Even though you expect your father to make the payments, you will be legally responsible for the mortgage payments and real estate tax. Among other possible issues, if you want to buy a house yourself, the payments on your father's house will be counted as debts that you are responsible for.

Before you do anything, you should review this plan with a lawyer. Whatever the reason is that your father wants to put the house in your name, there may be a better way to accomplish your goal.

[SweetieJean]

Excellent advice.

[merybeatriz66]

Great!

[kevinpruna]

Thanks guys.

I would listed as the owner and I would be the one with the mortgage in my name. However, he would be the one giving me money to make the payments.
He is trying to circumvent some other issue because he is currently making payments on another house.

So just to get the gist of this, if the mortgage is in my name, a no go?
If he puts me as the owner, but the mortgage is in his name, it's okay?

We are meeting with lawyers tomorrow. Should I go in asking anything specific?

[SweetieJean]

"He is trying to circumvent some other issue because he is currently making payments on another house."
You must discuss that with the lawyer.

[rjs]

"I would listed as the owner . . ."

You're not just "listed" as the owner. You ARE the owner.


"if the mortgage is in my name, a no go?"

It's a no-go if you might ever want to buy a home of your own. You also have to consider things you don't like to think about or that you think will never happen. For example, what if something happens that causes Dad to stop giving you money for the mortgage payments? Any of a number of unexpected things could happen that makes him unable to continue, or you could have a falling out. (It happens.) You're still on the hook for the payments. The mortgage could be a 30-year commitment. You can't predict the future.

One tax-related problem that occurs to me is that the tax deduction for mortgage interest is lost. Your father can't deduct it because he doesn't own the house and he's not making the payments. You can't deduct it because it's not your home.


"If he puts me as the owner, but the mortgage is in his name, it's okay?"

The lender won't do that. Your father can't mortgage a house that he doesn't own. They will only lend to the owner of the property.


"We are meeting with lawyers tomorrow. Should I go in asking anything specific?"

Explain to the lawyers exactly what the issues are that prevent your father from buying the house himself, and ask them to suggest a solution.

Ask them to explain any possible estate and inheritance issues. What happens if your father passes away? What happens if you pass away before he does? Again, all kinds of unpleasant things can happen unexpectedly, and you can't predict the future.

What happens if you get married? What happens if your father gets married?

Ask about property maintenance and liability issues. You're the owner. If the town issues some sort of complaint against the property, you're responsible. If someone falls on the sidewalk in front of the house, you get sued.

Ask about other considerations that you don't like to think about. For example, what happens if your father can no longer live alone and has to go into a long-term care facility such as assisted living or a nursing home.


You should discuss the plan with a tax professional in addition to the lawyer. You can ask the lawyers about income tax and estate tax considerations, but lawyers often know less about taxes than they think they do. You also have to consider state income and estate taxes, and state inheritance tax if your state has one.


One other thing to think about, and to discuss with the lawyers. Is there anyone who might object to your father turning over significant assets to you? Your mother? Any siblings or half-siblings of yours? Any past or present wives of your father? Things could get ugly if someone else thinks they have a claim to some of those assets.

[Carl]

You're asking a bunch of armchair lawyers (and that includes me) for legal implications of future actions. You can't hold anyone accountable in this forum if the information provided to you is wrong. Laws differ state to state and that can (and almost always do) affect things on the federal level. You need to seek the services, advice and assistance of a real estate agent *AND* a CPA or tax attorney in your local jurisdiction to get facts, and to have someone you can hold legally accountable and financially culpable for the services and/or advice and information they provide you.

[fanfare]

your attorney should be asking YOU these questions, not the other way around.
My mom got a bad attorney for a sale to a family member, he did not represent her interests and it ended up costing her tens of thousands of dollars.

[Opus 17 · Accepted solution]

In order to deduct property taxes, you must be the legal owner of the property and you must pay the taxes. In order to deduct mortgage interest, you must be legally obligated on the mortgage (the named borrower) and you must be an owner of the property and you must actually pay the mortgage.

 If you are the legal owner on the deed, and the mortgage is in your name, and you pay with funds that are a gift from your father, then you can still deduct the expenses.  Your father may be required to file a gift tax return depending on the annual amount of the gift, but if he gives you money, and you use the money to pay the mortgage, then you can deduct it. 

If he were to buy the house in his name with his name on the mortgage, and then he were to gift you the house without refinancing the mortgage in your name also, you will have various kinds of financial and tax troubles.