Parents want to put title of house in my name, how can I be screwed over here?

[sandmanwake]

Long story short, my parents are idiots and their finacial situation is rather bleak right now. They've got a house they're still making payments on that they can't afford. They want to try to sell that house. They've got another house which is paid off. They want to move back into that house, but want to transfer the title of that house to be in my name. I'm a college student, no job, a car payment, student loans, and about to graduate. Other than the taxes on the house, how can agreeing to have the title of the house in my name screw me over? Basically, I don' t trust my parents and want to find out how to protect myself from being finacially ruined because of my parent's bad decisions.

 

[911paramedic]

two words "capital gains"

 

[PsychoAndy]

well, as long as you dont get sued and the plantiff dosent want your house i guess you're ok

oh, wait

if you improperly maintain the house you might get sued (not putting up a fence so a dog can run 1/4 of a mile after breaking out of a neighbors yard)
you might pay captial gains tax since you're basically being given a house

thats all i can think of

 

[wyvrn]

NM I guess you mean the paid off house in your name.

 

[NikPreviousAcct]

You'll also be legally responsible for property taxes.

nik

 

[BaliBabyDoc]

Assuming the house is worth more than $10,000 (no offense intended) you will owe taxes on your "gift". In the absence of significant employment the IRS will usually work out a payment plan for you. You can charge your parents rent which should more than cover your IRS bill and property taxes. You should probably consult a tax attorney. It's unlikely your parents will screw you . . . assuming you are a good kid. You will qualify for a lot of goodies (and scams) as a home owner, plus creditors will think you are a stud . . . until they find out you have no capital. Worst case scenario your parents don't foot the property tax or IRS taxes . . . most states protect the primary residence from creditors; IRS may not be as forgiving and would probably go after your 'rents . . . after confiscating your computer.

 

[911paramedic]

well, as long as you dont get sued and the plantiff dosent want your house i guess you're ok

I forgot about that part, lol.

You are going to have to increase your car insurance to cover whatever the house is worth or you can be sued and lose it all together.

Liability if people get hurt on the property?

It sounds like a really bad idea to me.

 

[sandmanwake]

Yeah, I know about the property tax part and I'm going to be up front with my parents in that I want them to be paying for it since I'm not going to be living there. If they don't want to do so, I guess I'm going to have to be mean and make sure I don't get in trouble even if it hurts them. I'm really tired of bailing them out of crap where a little common sense and self control would have prevented their situation in the first place.

Capital gain. Yes, I've also considered that, though I'm not too sure on the situation in this case. I've talked to a lawyer and all he told me to worry about was the property tax. I'm not sure he knows what he's talking about though, so I'd appreciate any info anyone can give me. Does this mean when I do my taxes next year, I'm going to have to put the value of the house as earned income, so I'll be paying the government massive money in owed taxes?

edit:
Basically, my parents won't be paying me any rent or anything. They just want to put the house in my name so that if it comes down to it, it would improve their chances of getting welfare. I'm so ashamed right now. As for them not screwing me over, I'm not going to count on that, they've a history of just using me selfishly and I wouldn't be suprised if I end up badly somehow if I'm not careful.

 

[911paramedic]

Assuming the house is worth more than $10,000 (no offense intended) you will owe taxes on your "gift".

I am pretty sure that there is a one time allowance of a $600K gift, but then no other gifts are exempt.

 

[XMan]

What if he buys the house from his parents? Would he still be subject to capital gains? Say, for $100 or something like that.

I believe a friend of mine did that to avoid inheritance tax on a home owned by his father in law.

 

[911paramedic]

Does this mean when I do my taxes next year, I'm going to have to put the value of the house as earned income, so I'll be paying the government massive money in owed taxes?

capital gains come into play after the house is sold. If it was purchased for 100K, sold for 200K you would have to pay taxes on the difference.

 

[911paramedic]

Say, for $100 or something like that. LOL, that would be even worse.

Then he would have to pay taxes on the difference of the purchase and sales price, which would be $100 less than he sells it for. That means that he would pay taxes on the entire purchase amount for the most part.

 

[sandmanwake]

I think some people are confused as to which house is which. The house that will be sold (house A), I will have nothing to do with. It's the house that they own 100% now (house B) that they want to transfer the title to me. That house will not be sold. My parents wants to move back into that house and just live there.

My parents wants to transfer the title of house B to my name. They will move back into house B while trying to sell off house A. Since there is only a transference of title of house B, but no selling or anything, will I have to pay capital gain taxes on that?

 

[Maetryx]

It seems to me that your parents are trying to hide assetts from creditors. People don't sell houses for $0.00. And don't forget that the IRS may consider your new acquistion as "income" of the most taxable type: unearned capital gain. Meanwhile, your parents' charade may be transparent to the bankruptcy judge and the IRS.

 

[sandmanwake]

Hum, what about that, buying the house from my parents for $1 I mean. Would that be better than them just transfering the title of the house to my name?

 

[Tates]

<< two words "capital gains" >>


Capital Gains kick in if the property was not a primary or secondary residence. If it is a primary or secondary residence and if the house was lived in at least 3 of the last 5 years, then any capital gain is non-taxable.



<< I am pretty sure that there is a one time allowance of a $600K gift, but then no other gifts are exempt. >>


No. You may be confusing this with the death tax.

If your parents are in dire financial straights and are trying to avoid seizure of the assets, with possible bankruptcy on the horizon, the Bankruptcy Court will recognize the ploy and negate it. The court will also question any last minute asset transfers or sales that involve less than an "arms length" transaction, i.e. dealings with immediate family members.

Refer them to a good Bankruptcy Attorney.

 

[sandmanwake]

Maetryx, that's exactly what I think they're trying to do. That's also part of why I'm so hesitant to agree to do this. I don't want to do anything illegal and get in trouble just because my parents are idiots.

 

[HappyPuppy]

Yes, you will have to pay taxes on whatever the house is worth.

I hate being serious, but here goes. Tell your parents to talk to an attorney to find out how they can legally protect house B. There are ways including homesteading and living trusts to name only two.

After giving your parents the aforementioned advice, move 3 states over and change your name. You deserve a chance in life without those two losers weighing you down like a 2000lb anchor.

Good luck.

 

[sandmanwake]

The problem with trying to advise my parents is that they think they know better than me, so I should just let them figure out what to do and just agree to do what ever they come up with.

Happypuppy, I've thought of doing what you said, the problem is that they would put out a missing person report on me and follow where ever I go.

 

[911paramedic]

Capital Gains kick in if the property was not a primary or secondary residence. If it is a primary or secondary residence and if the house was lived in at least 3 of the last 5 years, then any capital gain is non-taxable.

That is only true if the money is re-invested in a house of equal or greater value of the sales price within 18(?) months. Otherwise it is considered capital gains.

You are right about the death tax, I got that mixed up.

 

[sandmanwake]

I see residency also has to be taken into account from what people are saying. Bottom line is I do not ever plan on living in that house ever, so it will not be a place of residency for me and I will not be earning any income from that house at all.

 

[Shaftatplanetquake]

<<It seems to me that your parents are trying to hide assetts from creditors. People don't sell houses for $0.00. And don't forget that the IRS may consider your new acquistion as "income" of the most taxable type: unearned capital gain. Meanwhile, your parents' charade may be transparent to the bankruptcy judge and the IRS. >>

Sounds quite scary. I'm sure you don't want to get screwed financially. If I were you, I would tell them to leave me out of their finances. There seems to be a possibility for you to get screwed here, and apparently there is nothing in it for you so why should you take even the smallest of chances?

 

[erub]

The gift tax and estate/death tax are one in the same. Now the exemption is up to 1 million per person (2 mil for both a husband a wife) that they can give tax free to their heir, either during their lifetime or after their death. So neither you nor your parents would be forced to pay gift tax/estate tax, if the house is worth less than 2 million dollars (which if their going on welfare, i should hope so :Q)

 

[sandmanwake]

There seems to be a possibility for you to get screwed here, and apparently there is nothing in it for you so why should you take even the smallest of chances?

I have a little sister who isn't even old enough to go to school yet living with my parents. I don't know her well nor do I love her as a sister since I pretty much moved out before she was born, but I don't want a child to be homeless because the parents are idiots.

 

[sandmanwake]

erub, if what you say is true, then all I really have to worry about here would be the yearly property tax right?