What is the name of your state? Massachusetts
It's a bit of a long story, please hang in there, I'm trying to make it as easy and simple as possible.
Recently, my mother's home burned as so she has been dealing with her insurance company to receive compensation.
The insurance company will give her 250k if she rebuilds her home or buys a new home. If she simply sells her home, then they will give her 175k.
So there is 75k that is counted as depreciation. Obviously, if there is a way to recoup this money, then that would be terrific, as 75k is a lot to leave on the table.
My mother is not in a hurry to buy a new home as she does not know where she wants to live, but the insurance company is pressuring her to decide quickly as the fire was in may of 2004.
As timing would have it, I am in the process of buying a home. Her insurance adjuster suggested one way for her to recoup the 75k of the insurance dereciation is for her to purchase the home for me, and then use a quit claim to put it in my name. So here is my understanding of how it would work:
- I make the downpayment and all mortgage payments. Both my name and my mother's would be on the mortgage, but the title of the house would be in her name.
- Once she has everything settled with her insurance company, she would quit claim the home to me.
So my questions are:
1. Is this legal? Her insurance adjuster assures us this is legal.
2. What are the tax implications and do they outweigh the benefits of receiving an extra 75k from the insurance company?
Thanks in advance for any help.
It's a bit of a long story, please hang in there, I'm trying to make it as easy and simple as possible.
Recently, my mother's home burned as so she has been dealing with her insurance company to receive compensation.
The insurance company will give her 250k if she rebuilds her home or buys a new home. If she simply sells her home, then they will give her 175k.
So there is 75k that is counted as depreciation. Obviously, if there is a way to recoup this money, then that would be terrific, as 75k is a lot to leave on the table.
My mother is not in a hurry to buy a new home as she does not know where she wants to live, but the insurance company is pressuring her to decide quickly as the fire was in may of 2004.
As timing would have it, I am in the process of buying a home. Her insurance adjuster suggested one way for her to recoup the 75k of the insurance dereciation is for her to purchase the home for me, and then use a quit claim to put it in my name. So here is my understanding of how it would work:
- I make the downpayment and all mortgage payments. Both my name and my mother's would be on the mortgage, but the title of the house would be in her name.
- Once she has everything settled with her insurance company, she would quit claim the home to me.
So my questions are:
1. Is this legal? Her insurance adjuster assures us this is legal.
2. What are the tax implications and do they outweigh the benefits of receiving an extra 75k from the insurance company?
Thanks in advance for any help.