Question: I do not have the credit yet to get a home loan. My parents want to buy a house for me but I would be making the mortgage payments. The house will be under their name as the owners. They already own their own home. Will this be considered rental income for them? Is the interest tax deductible for them or me? I will eventually get a loan to pay off theirs. If they sell the house to me below market value, will I be taxed on the gain? Is there anything else that we need to consider before proceeding? Thanks…
Answer: At the end of the year the mortgage company will issue a 1099-INT statement to your parents regardless of who remitted the payments since the loan is in their names and their SS#s are on file.
Your payments are merely *rent* so you’ll not receive an interest deduction.
The idea of asking your folks to co-sign on the loan has already been made and is an idea to consider. But why not run this issue by your CPA, he can centainly offer the best advise on how to structure the purchase so you can both build your credit and get the interest deduction on your taxes.
Finally, don’t get sucked in to the mindless idea that man owns land ~ houses ~ office buildings. In the end, your bones and mine are placed in the safe keeping of Mother Earth. Mother Earth owns all of us ~ not the other way around!
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