Brooklyn, NY · Member since 2017 · 1 post · 0 votes
My grandfather and then my mom put my sister and my name on the deed to my grandfather's home. However, I want to purchase my own home. Will my name being on the deed of this inheritance cause me to miss out on using a first-time owners mortgage opportunity? I don't want to lose my inheritance, but I want to buy my own home. What is out there for people in my situation if I can't use first-time home privileges?
You are considered a first time home buyer if you haven't owned or purchased a home within the last 3 years. Since they added you to the deed you are considered a homeowner.
Also, there are potential tax consequences for "adding" children to title versus inheriting the property. You should speak with a CPA at some point.
You are considered a first time home buyer if you haven't owned or purchased a home within the last 3 years. Since they added you to the deed you are considered a homeowner.
Also, there are potential tax consequences for "adding" children to title versus inheriting the property. You should speak with a CPA at some point.
Investor · Menifee, CA · Member since 2015 · 534 posts · 216 votes
9y
Christopher Phillips I agree with. The step up tax break you can get could be in jeopardy. I believe the best way is to have the property in a trust and when the family member passes it should go to the next in line. I'm not a CPA and not sure if adding a family member to the deed can be a bad thing in the tax region but you and your family should talk to a professional about this. My advice. Hopefully some of these tax guys on the site will chime in.
Potential gift tax when it was deeded since it's a gift of equity...
When you gift a home to a child, the child assumes the original owner's basis as the their basis. So, if the home was bought a long time ago, when prices were cheap, then the basis is very low. So, when the child goes to sell down the road, the capital gains will be much higher.
When you inherit a house through a will, the basis is the value of the home at the time of the inheritance. So, if an heir needed to sell right away, there probably won't be a capital gain.
Also, a single person ($250,000) or a married couple ($500,000) receives a capital gain exemption when selling. If a parent and a child are on the deed together, there won't be an exemption.
Also, and I've seen this personally, adding the child can cause trouble down the road since the child would be part owner.