Stay in the house or buy a new house

[queenh2o]

What is the name of your state? California

2 part question--see below after brief description.

My husband and his father are taking out all the equity from the property that his father gave us a year ago as a "GIFT"; we were to pay monthly mortgage on it. However, my husband is goint to be a part owner along with his father on this property. The property is going to be refinanced, so we have to start paying a 30 year mortgage all over again.

Do you think the house with no equity in it and given partially to his son after refinancing is considered a GIFT? Is this the same thing as buying a new house and paying a 30 year mortgage?

[divgradcurl]

Originally Posted by queenh2o

What is the name of your state? California

2 part question--see below after brief description.

My husband and his father are taking out all the equity from the property that his father gave us a year ago as a "GIFT"; we were to pay monthly mortgage on it. However, my husband is goint to be a part owner along with his father on this property. The property is going to be refinanced, so we have to start paying a 30 year mortgage all over again.

Do you think the house with no equity in it and given partially to his son after refinancing is considered a GIFT? Is this the same thing as buying a new house and paying a 30 year mortgage?

The facts you've given here really aren't very clear. Who currently is on the deed to the house? When the father gave you guys the house, did he transfer title, or did he just let you live in it and pay the mortgage for him? What is the point of all of this?

Do you think the house with no equity in it and given partially to his son after refinancing is considered a GIFT?

Yeah, it's a gift, because you've been given something -- a house! It's encumbered by a mortgage, or course, but it is still a gift. The more tricky part may be determining the "basis" for when you later sell the house.

Also, what is the reason for putting the house in Dad's name and Son's name but not in your name? The son's part of the house is his seperate property, because it is a "gift" -- but as soon as he starts paying the mortgage on it, his ownership interest in the house will transmute into community property, so you will end up having an interest in the son's half of the house anyway.

Complicated, like I said. Maybe you can answer the questions I listed above, and explain WHY this is being done, and that will help provide you with the best possible advice.

Is this the same thing as buying a new house and paying a 30 year mortgage?

Well, not exactly -- if you bought a house on your own, presumabley you would have a down payment, so it wouldn't be a zero-equity situation (unless you did a zero-down loan). Also, if you and your husband bought a house on your own, your father-in-law wouldn't have an ownership interest in the house. And finally, if you bought a house, your "basis" would be the purchase price of the house, and not the price your father-in-law paid for the house.