strategystrong
New Poster
Cash: $ 0.45
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Joined: 26 May 2007
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| Buying a house for mom |
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Hi,
I've just headed into college and have been asked to do a favor for my mother, but have a few concerns that I'm confident you all will know about.
Stress has created some mental health problems and so she has just received widows social security disability. She wants to buy a house, but because her credit is bad, she wants for her house and mortgage to be under my name. It seems as if she is giving me the $15,000 plus all of the monthly payments as a gift, so to avoid paying gift tax, how should I handle this? Should we make some kind of contract? Also, would this income need to be reported on my next return? Any specific details and explanations would be very much appreciated.
Thanks very much for all of your time; this forum is great,
ED
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Sat May 26, 2007 3:08 am |
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oldguy
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Location: arizona
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strat. You probably won't be able to buy a second house for yourself during the time that you own your mother's house, ie you won't be able to qualify for two mortgages at the same time. A lender won't let you count the gifting as rental income.
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Sat May 26, 2007 5:20 am |
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No-Brainer
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Location: Oregon USA
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Am I missing something, or isn't your mother going to live in the house? If that's the case, she will need to gift you the down payment, but the monthly payments are rent and not a gift, right? Be sure you realize that everything you do does not qualify as owner-occupied housing. You will be a landlord with investment property unless you live there too.
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Sat May 26, 2007 2:40 pm |
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efflandt
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Location: Elgin, IL USA
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If she gives you more than the allowed annual gift exclusion, "she" is responsible for filing a proper gift tax form, even though tax would not be due unless it exceeds the unified lifetime exclusion.
If the money she gives you is for something expected in return (a house she is going to live in), it would really be considered rent instead of a gift, and "you" should properly file income and expenses for that.
If it goes to a mortgage is in your name, "you" would be responsible for that mortgage. And unless you lived in it for at least 2 of the 5 years before you sell it, you would not have any capital gains exclusion. And there may be special considerations if it has been an investment property (rental, etc.).
I just caution you if attempting to hide her assets from the government (for public aid) or creditors, because they do not react kindly to fraud.
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Sat May 26, 2007 8:41 pm |
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strategystrong
New Poster
Cash: $ 0.45
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Joined: 26 May 2007
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Thank you all for your thoughtful suggestions. After reading all of them I think I might try the contract strategy, unless someone persuades me against it.
After talking to the local people and finding out about the great stores that have plans to be built, I think I would like to buy this as an investment property anyway. My sister owes me about $12,000, so I'll get her to pay me that money to make as the down payment. Then I suppose we will make the contract. In a month or two when my mother gets her backpayment amount, she just may be generous to give me money that she was planning on giving me until she needed a place to live.
So here it is: She really needs a place to live and I need someone trustworthy to sit in the house until I sell it for more than what I paid for it. During the stay, she rewards me with a lump sum for my generosity; does this sound like fraud or a good strategy, just so long as I don't do the same thing again after this house is sold?
thanks again; btw, I read each comment with thought and appreciation
ED
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Sun May 27, 2007 3:19 am |
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eve0806
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Joined: 23 Mar 2023
Location: London
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what a worthy gift for mom my friend
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Fri Apr 28, 2023 5:59 am |
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