HELP - Trying 2 get rental property in our names

[knightwing44]

What is the name of your state? MD

Hello,

Ok, here is the story:

1) My father-in-law owned a home which he used to live in.

2) He then moved and made that home into a rental property while living in his new house.

3) He sold the rental property last year and helped my wife (his duaghter) and I purchase our new home. Thing is, he helped us buy the house with that money so that it was still a rental property (to save on taxes or something).

4) So now we are technically renting from my father-in-law because the house is in his name.

5) Is there a quick and easy (and not heavily taxed) way of transfereing ownership to my wife and I and making it a non-rental property?

Thanks - any help is greatly appreciated.
Knight

[pojo2]

Was this a properly executed 1031 exchange?

[knightwing44]

I don't know what that means... I kinda moved down here after all was said and done. I will assume that everything was done very legitly - Could you explain?

[pojo2]

The rental property, which is how he set up your house is an onvestment property so there may be tax consequences when that is more or less sold to you by him. Only a Tax Professional can look at all the paperwork and advise you on the tax implications of the transactions you want to do.

[LindaP777]

Originally Posted by pojo2

Only a Tax Professional can look at all the paperwork and advise you on the tax implications of the transactions you want to do.

Agreed! Talk to your accountant (or dad's accountant). We do not have enough about the house and previous the transactions to know what can be done.

The best case scenario (I'm actually doing this exact thing for my son) you may be able to buy it from dad for the amount he's got into it (no profit for him, so no capital gains). There is also a great loan that's available for first time home buyers, 100% financing (no money down), at 5.9% fixed interest rate for 30 years! I believe you have to have at least a 620 credit score to qualify. If interested, you can contact me and I'll pass alone the info for my mortgage guy.

[knightwing44]

Hi again,

Ok, a little more detailed info.

Yes, this was done properly via a 1031 exchange. We had to find this property within a set time limit so as to avoid capital gains tax.

So basically, the problem that remains is - Can this property be deeded over (remember its currently a rental - to us) to us without paying huge taxes (we heard maybe 40%). And I guess we would have to make the property into a non-rental(??) since we're living in the home.

We would like to transfer the mortgage to our names too, but that's not AS important as getting the house in our names...

Again, any help is greatly appreciated! This is a very nice little community you have here.
Knight