What are the pros and cons of being a non-occupying co-borrower? Planning to help my dad buy his first property but he has low income. Thinking of buying a property close to his work and house hack it. Both of our names will be in the title so I'm wondering who will claim the rental income/expense or if we sell it later on who will report the sale in the tax return? Also, if either of us wanted to transfer full ownership to one of us later on, will that result in a taxable transaction?
I will appreciate any help. For all the accountants, lawyers and other specialists out there, I will use any response for informational purposes only.
Tax treatment gets a little complicated when two individuals buy a multi-unit property and one of them occupies a unit. Typically I'd want to know what you and your dad's agreement for the whole life cycle of the property looks like, particularly how the rental cash flow is split and how the gains on sale will be divvied up. Is your dad going to pay 1/2 of all operating costs or is the cash flow from the rented unit going to cover his expenses? All important questions that need to be answered.