Transferring Deed To Nephew
I am getting divorced, need to pay off my mortgage which is $170,000.00 . Going to transfer the deed of another property which was gifted to me 5 years ago by a parent who is now deceased, want to now gift the property to my nephew, he will then get a home equity loan which is lower interest than a regular mortgage, on that property for $170,000.00, give the money to me to pay off my mortgage, so I can afford to live in my home. My question is, are there tax implications involved and is this legal to do? :-o
look at the tax Consequences of if gifting that amount of money.
Also, who pays off the heloc on the 2nd house?
is the gifted house a marital asset?
Is it credit worthiness that's blocking you from tacking the heloc yourself? Many have friendly underwritting is < 80% LTV
Why not sell it to him for 170k?
Sunshine,
What are you trying to accomplish?
You could sell the place and get all cash.
You may have to split the value with your ex unless the state or prior agreements indicate that it is not common property.
Do you want the property to remain in the family or something? The one you are gifting?
If you do as proposed who is going to service the debt?
Any reason your other half can not take a note for their share rather then being cashed out?
John
[addsig]
To explain in detail, my home is worth about $450000.00 , I owe $170000.00, my spouse agreed to take $65000.00 cash to buy himself a condo and use that for a down payment, in turn he will give up his half of the house to me. When the home was bought the entire down payment came from me. Now, my mother died 3 years ago, her house is in my name but is half my sisters. It is worth around $240000.00, paid , no mortgage on property. My sisters son is living there, said he will get a loan to pay off my mortage on my house for $170000.00 because I cannot afford to pay it when I live here alone with my children. My spouse , soon to be ex husband is leaving next month to move into the condo I gave him $65000.00 for as per our deal. My nephew is going to get a home equity loan on my other house for $170000.00 because the interest is 3 points less than a mortgage, so I am transferring the deed to him for free, then he will give me the $170000.00 to pay off my home. Selling the house my nephew is in is not an option he wants to stay there. We are trying to come up with the best way moneywise and mortgage wise, for me to live in my house and get the mortgage paid and for my nephew to live in the other house and pay as little interest as possible. Thank you for your replys, as you can see it is confusing and scary when a person like me doesnt know what they are doing.
You need a good local real state attny. to help sort this out for you. Can the guy handling the divorce make a referral?
I will call a real estate attorney today, thank you for the advice. There is no divorce attorney, we are trying to negotiate everything ourselves, then we are filling out divorce papers directly to the courthouse, trying to keep it simple as possible financially. No children from this spouse, so basically it is just the house and me giving him the 65 thousand to sign it over to me. Which is a good deal because the home is worth over 4 now. But just need to get the mortgage paid off so I can afford all the other bills monthly. Thank you again for responding, enjoy the day
Debbie
look into the real cost of interest w/ a HELOC that changes rates often (esp. in a market w/ rising rates) v. how long he plans to stay in the house.
If he's going to be there 5 yrs. maybe a 5/1 or 7/1 is a better deal.
I agree that an atty/cpa need to help you w/ this.
Quote: ,,, When the home was bought the entire down payment came from me. Now, my mother died 3 years ago, her house is in my name but is half my sisters. It is worth around $240000.00, paid , no mortgage on property. My sisters son is living there, said he will get a loan to pay off my mortage on my house for $170000.00.... sunshinegirlblue,
Here is my take on this transaction.
You don't tell us what the cost basis in your mother's house is. If the house was in her name when you and your sister inherited, then the appraised value of the house at your mother's death is the cost basis for the property.
I assume that both you and your sister are sharing equally, or since you made the entire downpayment, your share of the property is a little higher. For purposes of my discussion, let's assume that your sister and you have an equal share and that your basis is about $110K (your sister's basis is also $110K).
You are really structuring an installment sale to your nephew, whereby he takes title to your half of the property now and gives you a one-time lump sum payment of $170K in consideration at a later date.
In effect, you have a $60K capital gain on this transaction. No gift of equity to your nephew, and no gift of cash from your nephew to you.
I am confused by your comment that "her house is in my name but is half my sisters". Whose name is really on title? Whose name was really on title when your mother passed on? If your sister is not on title, then how is your sister a half-owner? You may have some probate issues to resolve here before you proceed with the sale to your nephew.