refinancing

[eagle35]

What is the name of your state? New Jersey

Ok, so here's a really tricky one (I think so anyway). The deal is that me and my fiance' want to refinance a home together that presently has my mother, father, brother, and myself on the title, and my mother and father on the mortgage. This home is my primary residence (has been all my life 25 + years) but is no longer the primary residence of my mother, father, or brother (not for 5+ years). All parties involved are OK with my fiance' and I refinancing the property together since I'm the one who has been taking care of the house solely with my own money the past 5 + years. We plan on having myself and fiance on both mortgage and title and taking all other parties off both (with their permission of course). My question is since this property is no longer a primary residence of my parents would they be hit with a capital gain tax if I took both off the title even though this is a refinance and not a purchase? Would keeping either of them (mother or father) on the title keep them from taking a capital gain hit if so? They no longer want any part of the home, but the capital gain would put them well in the red since the home's value isn't much more than the current mortgage. Unfortunately though, the current value is much more than the original cost of the home.

[TheGeekess]

Do not put your fiancé on any of the paperwork. Get married before you do anything like that. Otherwise, in 6 months, you'll be posting to ask how to handle the breakup....

As far as the rest of it, I'll defer to the seniors.

[FlyingRon]

Are you giving these people any money or other consideration for them giving up their ownership? If not there's no capital gain to be taxed. However, you do take over their original (low) basis.

The mortgage has nothing to do with capital gains.

[eagle35]

My fiance and I will be having our lawyers draw up a contract that states the exact percent of the home each of us will own, which we will be configuring the amount each of us is putting down and the amount of equity I (my family technically) still have in the house.

Nobody will receive any money or compensation for their share of the home. Basically they (mom, dad, bro) all have their own homes and better things to worry about.

So even though neither of my parents are primary residents of the home, as long as this is a refinance and not a purchase there is no capital gains tax? So they can just walk away from the home? No profit/money for anyone of them means no money to have to pay taxes on correct?

My mother is under the impression (an accountant she spoke with told her) that she would still be responsible for paying capital gains on the difference between the original cost of the home and the price the mortgage was refinanced at IF she was taken off both the title and mortgage since she is not a primary resident of the home. i don't believe this to be the case if I (and fiance) would be assuming the original low basis cost the house was purchased at originally, correct?