Girlfriend moving in

[katescape]

What is the name of your state (only U.S. law)? Pennsylvania
My girlfriend and I both have our own homes. She has a small amount left on the mortgage and I have a large amount left on mine. Our plan is to sell her home and move in with me , using some of the money from the sale to build an addition on my house. What is the best way to do this so that ...#1 she doesn' have to pay capital gains and #2 she doesn't get saddled with any of my debt if I should die and #3 I don"t get saddled with the whole anount of the home if she should die, while not losing the home in either case?

[JETX]

Originally Posted by katescape

What is the best way to do this so that ...#1 she doesn' have to pay capital gains and #2 she doesn't get saddled with any of my debt if I should die and #3 I don"t get saddled with the whole anount of the home if she should die, while not losing the home in either case?

The BEST way... is to not do it at all. Your 'plan' has LOTS of traps.
The second best way is to pay a LOCAL attorney to review ALL of the documents and issues and then follow his advice.

[FlyingRon]

I might suggest that you seriously consider not doing anything that would be hard to reverse unless you are sure (and I mean to the point of marriage) that you will be together for a long time.

She is eligible for a $250,000 capital gain exclusion on her house if she sells it if she had lived in it as her principal residence for 24 out of the preceding 60 months. If that's all the gain there is, then you have nothing to worry about.

If she isn't signed on your mortgage, she's not saddled with the debt from your house. Of course any money she contributes to the improvements on your house will be potentially lost.

I don't know what you mean by saddled with the whole cost of the home. You owe no more if she dies now than you do now (unless you are taking out additional loans).

The equitable thing to do would be to marry the girl, give her half the house, and take the money for the improvements. Make sure you are joint tenants (or tenants by the entirety). If you attempt to do this before you are married your mortgage may be indeed called. If you are married the feds preempt any due-on-sale clause.

In this case which ever one of you dies gets the entire ownership of the house. They can continue to own it and pay the mortgage, or they can sell it and move on.