Help! Good deal but is this an Investment or 2nd home?

[Jim Brandt]

I need some real insight on this subject and look forward to hearing from everyone and anyone they can help me or point me in the direction of someone who could help... thanks again! I have a friend who owns a condo outright. She's on a $500 a month fixed income. The property taxes are $3600 per year and HOA's are $300 per month. She's offered to deed me the house valued at $280,000, if I make the HOA payments, pay the property taxes, and allow her to live there rent free. She's 68 years old. Will this be considered an investment property? What are my tax benefits? If it isn't considered an investment property in this scenario what do i need to do for it to be considered an investment and show the losses for my tax benefit?

[Ashish Acharya]

@Jim Brandt , 

Unfortunately, a house that is in your name and used for personal purposes for more than 14 days during the year, or more than 10% of the number of rental days if greater, is considered to be a residence (not a primary residence).

You are deemed to have used a property for personal purposes when it is used by:

•  Anyone who rents the property for a price that is less than fair rental value.

So the house will not qualify for rental property or investment property. 

If she was paying you the rent, than it would qualify as a rental property.

Also, make sure when she deeds you the house, the transfer is accounted properly.