Question: I am hoping to get some insight from the investors in this forum.
Here is the situation:
My parents, who live in Illinois, are looking to purchase a townhouse in Florida. The purchase of the townhouse is really for me to live in and pay all expenses associated with it. Reason- I am coming off of a recent bankruptcy and can’t get a home loan, yet I easily pay $700 a month in rent alone. I think that is better put towards my, or someone related to me, net worth.
When the purchase is completed, can my parents add me as an owner yet not be on the loan? Will the bank allow that? If they can, is the property considered a second home to them and a primary residence to me?
If they cannot add me to the deed, and I am paying all the expenses and nothing else, will my parents have to file taxes as owning rental property?
I hope you can follow what I am asking. We don’t want there to be any tax issues about me paying for all the equity in the house. Even if it was considered rental property, they would just be breaking even because I am only paying the expenses associated with living there.
Any comments are appreciated. Thanks
Answer: Your parents can treat it as a second home, but since they’re not putting any money into it for mortgage payments and taxes, they’ll have no deduction. A better solution would be to find a lender who will put you on the loan with them as guarantors. That way you can take the deductions for the interest and taxes you’ll be paying.
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