transferring property to my son

[Anonymous]

my sons credit is almost perfect.  my credit is not that perfect.  we have several properties in our family that are almost paid off.  i owe close to 75k on a property that should be worth 350-400k.  is there any way my son can use that equity?  how does this work?  can i simply transfer the property in his name and he can apply for a home equity line of credit? is the process a little more involved then this?

[Walt_K]

Argghhh, darn mods (lost reply when this was moved).

Anyway, I was suggesting you post in mortgage forum and here you are.  I don't think you can transfer the property since there is a mortgage attached.  He'd probably have to assume the mortgage and alot of loans aren't assumable.  He could probably buy the place from you for what you owe if he could get his own mortgage.  Maybe there are other ways to do this; I'm no expert.  I'm really just shooting from the hip on this one.

[llecs]

Also, you'd want to talk to a CPA. You may have some tax consequences if you pass the property to him for less than the fair market value of the property. I believe the limit this year is $13k for him (and you can kick in another $13k for spouse if married), but you'd be taxed on the value of the home minus that exclusion minus whatever he assumed or paid for it. There's also a lifetime exclusion of $5M as of this year, but you'd really need to do some estate planning because it adds up pretty quickly. YMMV on the state taxes.

After we got married, DW's father gave us their home while they moved into a new one. It was a very nice offer and we were excited about it. It was valued at the time at $450k (pre-bubble) and his mortgage balance was only $150k or so. He told us to assume the mortgage, sell it, and use the equity to use as a down payment on a new home (DC market is expensive). We were gung ho, but I knew there would be some tax issues. You can't give away $300k without the govt' jumping into it. So, we went to an accountant who confirmed what I mentioned above. We walked away from the deal and decided to rent it from him at a nice price.

---

@Walt_K wrote:

Argghhh, darn mods (lost reply when this was moved).

---

[ShanetheMortgageMan]

---

@Anonymous wrote:

my sons credit is almost perfect.  my credit is not that perfect.  we have several properties in our family that are almost paid off.  i owe close to 75k on a property that should be worth 350-400k.  is there any way my son can use that equity?  how does this work?  can i simply transfer the property in his name and he can apply for a home equity line of credit? is the process a little more involved then this?

---

Use the equity for what?  In order to refinance there is a Continuity of Obligation requirement.