Hi,
My parents are buying a new place and will be adding my name on the house. I will not live in it because I have my own principal residence. However I will be paying the mortgage. The mortgage is under 3 names as the property is under 3 names. When they sell this house (which will be their principal residence), do I have to pay tax on it ? What's that tax consequence on my part?
Thanks for your input.
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david ingram replies:
If your parents are buying the house and putting your name on the title for estate purposes and you do not consider it your houe or your asset and will not pledge your "share" as security or list it on a balance sheet and they get all the money if and when it sells, then you do not have a tax problem even if you are making the mortgage payments as a gift or a loan to your parents.
However, if you are going to get a share of the profits if and when the house is sold, then your share will be taxable as a capital gain.
You should have a separate agreement drawn yup to that effect.
i.e. you will not pledge it as secuirity and have no claim on any money from the house if and when sold.
It wouold be permisable in those cirumstances for the payments you have made to be returned dollar for dollar (or less) but do not take 'any' profit or interest calculation.
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