Can I buy our home back for a dollar.

What is the name of your state? Iowa

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What is the name of your state? Iowa

Please help**************......

A friend of my wife's recently won a lawsuit and would like to payoff our home (the loan payoff is around $330,000). She would then show ownership of the home and have possession of the deed. Can we buy the home back from her for a dollar, so we can have the deed back? What taxes are there, and is this something that can actually happen? She could give us the money to pay it off, but then she would have to pay the gift tax. We are just trying to avoid paying taxes, and also want to do this legally. My wife's friend just wants to help us get out of debt, but she doesn't want us to pay her back. In other words, this is not a loan.

Thanks for all your help.

Charles

Can I borrow you wife's friend?

[abezon]

Any way you set it up, the friend will have to file a gift tax return. However, unless she gives away over $1.3M, she won't pay any gift taxes. The amount of the gift just reduces her eventual estate tax credit.

O.k., my wife's friend already has exceeded the 1.3 million in gift taxes, so it's inevitable she would have to pay gift tax if she paid off the house.

Can we sign the house over to her, and then she pay it off? Is that even an option?

......Or can she just pay off the mortgage, and we just live there? If this is possible, how do we re-obtain ownership without setting it up as a loan.

Again, what we are trying to do is save thousands of dollars in interest, trying to avoid having to pay any tax, and still have ownership of the home?

If you were in this situation, what would you do? Serious answers please.

Thanks.

Charles

[abezon]

Have her gift each person in the house $11,000 per year. Use the money to make a big principal payment once a year until the house is paid off. Alternatively, have her gift you the morgage payments each month (assuming it's less than $1833/month). You still get to deduct the mortgage interest at tax time, the gift is not taxable to you, & the friend avoids putting anything about it on her gift tax return.

That is exactly what my accountant suggested. It is the most logical. We just have to pay so much interest over the years, even though some is tax deductable. We would probably re-finance for a 15 year mortgage instead of a 30, or would just make large lump payments.

I'll finish with this last question which I'll repeat....

Can she pay off the mortgage and own the house, even though it is in our name, without having to pay taxes, and we just live in the home? This is the way we would prefer to do it. If she wanted to sell the home, we would just write up a new contract and buy it back.

Thanks.

Charles

[divgradcurl]

Can she pay off the mortgage and own the house, even though it is in our name

Whomever's name is on the title owns the house, not who pays for it!

Abezon told you the same thing your accountant told you -- that's the way to go about it. If anyone knew of a more clever way to avoid taxes, they would tell you.

[abezon]

Selling her the home is a bad idea. First, you run the risk of her selling it out from under you or passing away & not willing it to you. Second, a history of timely mortgage payments is great for your credit rating. Third, if the home is in your names, you can take out equity to finance other investments, such as a rental house, stocks, etc.

We undertand the risks of having her own the house, and we were planning on having an attorney draw up a will, etc. My wife's friend doesn't want to own the house after it is all said and done, she just wants to see the home payments dissolved. The only thing we were trying to do is avoid taxes, end the payments, and use our house as collatoral for future improvements. If anyone else has any other ideas, greatly appreciated!

Charles