2 Owners .. One Wants Out. How Can It Be Done?
Hello all...
I have a friend who owns a house equally with his father, but the father wants out. They still have a principal left on their mortgage. What does the son have to do to help get the father off the title of the house? Does he need to refinance the mortgage entirely in his name?
They are no hard feelings, just that the father wants his son to have the house now that he has a place of his own.
Any advice you can give me to give to them would be helpful!!
Thank you..
Chris g
Well there are actually two issues here, and tax implications to one of them.
Getting Dad off the title is very easy. He just executes a deed (waranty or quit claim) deeding his half to the son.
Getting Dad off the mortgage is more complicated. Unless Dad's financial statement is very week and the son's very strong the bank is unlikelyl to release Dad from his personal guarantee under the mortgage. But if the son is responsible and pays the bills on time this may not be a big psycological problem for dad. Otherwise, yes the alternative is for the son to refinance in his name alone.
Finally there are tax implications to the Dad gifting his half of the house to the son. For those questions I direct them to their CPA.
Thanks for the reply,
That was very helpful. I will be sure to pass along the info. to them.
Anyone else have a suggestion; be more than welcome to post as well.
Chris
If the son has been making the mortgage payments on-time for the past 12 months with cxl'd checks would help establish for a refi in the son's name if credit was a question. also FICO is a factor and W-2 employment. This would be ideal but there is always a way to get it done. I believe the gift lmiitation is $10K per year. You might, with CPA guidance, be able to set up a structure where you can get the $ over a period of time tax free to your dad, cash out & put in a MMF & pay him out, etc.
[addsig]