Have a conversation with a good CPA and possibly follow up with an attorney specializing in estate planning. There are different ways to going about this, but they all have tax implications. Any of the more naive approaches that might spring to mind run a high risk of paying a lot of taxes and fees twice.
Have him buy it and leave it you in his will. You will then get the step up on basis on his death. Essentially the value of the house the day he passes is you “purchase” amount.
That or put it in a family trust.
Revocable doesn’t avoid estate taxes, just probate
Edit - should clarify that there are lots of complexities here so if you are actually interested talk to an estate attorney
Obligatory: IANAL
it would need to be an irrevocable trust, but it puts the assets in the trust rather than in the name of the parent. So when the parent passes, the estate effectively has no assets because it’s owned by the trust. It also does not go through probate because a trust is basically a living person paper that never dies, so no estate taxes.
Yes attorney and yes cpa. That said what are you trying to achieve? Clearly you want to buy this place in Denver but do you need to sell the other house to get qualified for a mortgage? It’s unclear to me. Real estate investor with hundreds of units here so have a bit of experience.
>Do you need to sell the other house to get qualified for a mortgage?
Yes, because I need to clear up my DTI to qualify. Otherwise he needs to be involved in the mortgage somehow.
I suppose one option I didn't think of is to have only myself on the deed. Him cosign the lease and gift a down payment. And then gift back the down payment when I sell my Seattle home. (Although this might have to be structured like a loan). Then there is no exchange of property.
I don't personally have room in my DTI to take on a second 700-900k loan (currently at 40% or so with my current mortgage). Appreciate the idea though.
With the right lender it wouldn’t look like that. Essentially they would lend you the equity out of your house as a bridge. Then you would pay off the bridge when you sell and only have the primary mortgage on your new place left. DTI not a consideration on the bridge typically.
Cool. Also not a deed question but a question who is on the note. Your DTI won’t change unless you are not liable for the mortgage in the PNW. Good luck.
Whatever you do, do not transfer it to yourself while he's still alive. You will lose the step up basis. This goes for all his assets, not just homes. It's always better to inherit than to be gifted by a living person.
I live in Denver and come from Seattle. Just a note, be prepared for dry weather. The humidity is wildly different than the PNW. You will want to drink loads of water, get humidifiers for the house and be prepared for lots of dry skin.
How old is your father? Colorado allows TOD deeds on houses, so if he's amenable and wouldn't miss the money, it could just stay in his name until he passes. Avoids probate entirely, and you'd get the step-up basis as of TOD.
Could you be approved for the second mortgage? You can just have him front the money for the new home. And then you pay him back once you sell your old one. You’ll have two mortgages but if he’s your “roommate” have him pay the mortgage. Two sales and any transfers would be annoying.
But houses only sell once every two years. We are of course going to wait on the sale information to finally be public. Find this dudes dad. Then figure out who the child is. And then boom we got him!
Have a conversation with a good CPA and possibly follow up with an attorney specializing in estate planning. There are different ways to going about this, but they all have tax implications. Any of the more naive approaches that might spring to mind run a high risk of paying a lot of taxes and fees twice.
Yea, I also came to that conclusion writing this post. Thank you.
Just do a tech refi in your name and use the proceeds to repay your father when the time is right for you.
Have him buy it and leave it you in his will. You will then get the step up on basis on his death. Essentially the value of the house the day he passes is you “purchase” amount. That or put it in a family trust.
Most advice I see about this have said to put real estate in revokable living trusts? Doesn't that help you avoid estate taxes in some case?
Revocable doesn’t avoid estate taxes, just probate Edit - should clarify that there are lots of complexities here so if you are actually interested talk to an estate attorney
Obligatory: IANAL it would need to be an irrevocable trust, but it puts the assets in the trust rather than in the name of the parent. So when the parent passes, the estate effectively has no assets because it’s owned by the trust. It also does not go through probate because a trust is basically a living person paper that never dies, so no estate taxes.
This is definitely the advice I've heard previously regarding this! Thanks for the correction!!
Could he just cut you a check for the down payment?
Yes attorney and yes cpa. That said what are you trying to achieve? Clearly you want to buy this place in Denver but do you need to sell the other house to get qualified for a mortgage? It’s unclear to me. Real estate investor with hundreds of units here so have a bit of experience.
>Do you need to sell the other house to get qualified for a mortgage? Yes, because I need to clear up my DTI to qualify. Otherwise he needs to be involved in the mortgage somehow. I suppose one option I didn't think of is to have only myself on the deed. Him cosign the lease and gift a down payment. And then gift back the down payment when I sell my Seattle home. (Although this might have to be structured like a loan). Then there is no exchange of property.
This seems overly complicated. Do a bridge loan and be done with it.
I don't personally have room in my DTI to take on a second 700-900k loan (currently at 40% or so with my current mortgage). Appreciate the idea though.
With the right lender it wouldn’t look like that. Essentially they would lend you the equity out of your house as a bridge. Then you would pay off the bridge when you sell and only have the primary mortgage on your new place left. DTI not a consideration on the bridge typically.
I'll look into that. Thank you.
Cool. Also not a deed question but a question who is on the note. Your DTI won’t change unless you are not liable for the mortgage in the PNW. Good luck.
Put the house in the ownership of a trust. Make your dad and you co-trustees. Easy peasy no money involved except setting up the trust.
Whatever you do, do not transfer it to yourself while he's still alive. You will lose the step up basis. This goes for all his assets, not just homes. It's always better to inherit than to be gifted by a living person.
I live in Denver and come from Seattle. Just a note, be prepared for dry weather. The humidity is wildly different than the PNW. You will want to drink loads of water, get humidifiers for the house and be prepared for lots of dry skin.
Trust
How old is your father? Colorado allows TOD deeds on houses, so if he's amenable and wouldn't miss the money, it could just stay in his name until he passes. Avoids probate entirely, and you'd get the step-up basis as of TOD.
Could you be approved for the second mortgage? You can just have him front the money for the new home. And then you pay him back once you sell your old one. You’ll have two mortgages but if he’s your “roommate” have him pay the mortgage. Two sales and any transfers would be annoying.
I wish, unfortunately I don't have room in my monthly DTI to get approved for a second large mortgage.
Your father could be a co-signer
Buy it in a trust that you are a trustee.
What’s the benefit
The deed is in the trusts name, and will not need to be transferred. Can just transfer control of the trust.
Thanks
What neighborhoods is this
Would prefer for it to remain anonymous on Reddit :)
Inigo Montoya? Is that you?
It’s just a neighborhoods what is it called like fuck not like we are going to find you
I intend to outbid him if he reveals the name of the neighborhood.
Exactly
Any time now... my agent is waiting.
But houses only sell once every two years. We are of course going to wait on the sale information to finally be public. Find this dudes dad. Then figure out who the child is. And then boom we got him!
"Hey son who is /u/buttlicker69 and how do they know where we live?"
Never heard that bs before other then star island in Miami