Share a loan with a family member

[Unregistered]

My aunt bought a house 15 years ago and wants to take a loan to remodel the house. However, she already retired two year ago and now has very little monthly income. The bank would not approve a loan because of her situation.

As a family member, I want to help her out since I have a stable income. I also think this would be a good investment to me. I am a renter now and by doing so I can own a property

What should be my next step? Can she add me as a joint owner so that I can take a loan? What are the tax implications to this case? Do I have to pay for gift tax? After paying the mortgage, can I claim the interest for tax deduction?

[Unregistered]

My aunt bought a house 15 years ago and wants to take a loan to remodel the house. However, she already retired two year ago and now has very little monthly income. The bank would not approve a loan because of her situation.

As a family member, I want to help her out since I have a stable income. I also think this would be a good investment to me. I am a renter now and by doing so I can own a property

What should be my next step? Can she add me as a joint owner so that I can take a loan? What are the tax implications to this case? Do I have to pay for gift tax? After paying the mortgage, can I claim the interest for tax deduction?

I think you have to decide whether you want to be a "family member" and "help her out," or "I think this would be a good investment for me."

Different answers depending on what your answer is.

[Black Bart]

Loan

Gosh, this raises all kinds of other questions. Just for openers:

(1) Has she been renting the house out in the past?

(2) You say "I am a renter now," so does that mean you're going to move in or are you going to rent it out?

(3) Are you exchanging your "ability to get a loan" for a one-half share in the house or
are you paying her something additional?

(4) If renting it out you'd have to file a partnership return with her if you didn't buy her out. Have you considered that?

Your questions:

Add you as a joint owner? don't see why not.
Tax implications: depends on answers to some of the above.
Gift tax: don't know. have to ask somebody else on that.
Paying the mortgage: if you are legally obligated to pay the mortgage and do pay the mortgage, then you can deduct it.

[Mark Goldberg]

Loan or buy

You could loan some money to your relative and she would pay you interest. Or you could buy a percentage of the house from her. The first option is much simpler.

[Faye]

My next step?

To answer your questions

1. She never rented out the place.
2. I am planning to move in after the remodeling is done.
3. Given the situation of current real estate market I just can’t afford to buy a house on my own. Definitely this would be a great opportunity for me to own a home (or 50% of the house technically speaking). Does that mean I am exchanging a loan for a one-half share in the house?

What is my next step? Should I go talk to an accountant, a tax lawyer, or a real estate broker to clarify the details?

Thank you all

[Black Bart]

What is my next step? Should I go talk to an accountant, a tax lawyer, or a real estate broker to clarify the details?

Since you're not going to be in the rent business, I guess the only question is whether or not there's tax on the deal. Is it a gift or a quid pro quo exchange (something for something)? Going to see an accountant would probably be best (cheapest). A tax lawyer could do the same thing, but sometimes they charge an arm and a leg just to give you a thirty minute consult. Never mind the real estate broker--they generally don't know anything about taxes.