Posted on: 15th Feb, 2009 05:42 pm
we are considering becoming a co-borrower on a mortgage with our son. he has qualified for $160k loan although it would really stretch him beyond his comfort zone. he has recently graduated with a bachelor degree and has been working in a job within his degree for approximately 6 months. loan officer said since he went directly into a job that was in the field of his degree it would count for the 3 years of on job normally needed to qualify for loan. we have agreed to pay $200/month of the mortgage until as his salary increases at which point we will turn over the full responsibility to him. we feel that this could be within 5 years. my questions are: if we are non-occupying co-borrowers can we take 100% tax credit for the interest paid on the loan. this would benefit us as we are looking for a tax credit to help lower our taxes. he is in agreement with this as he currently makes approximately 33k year and does not need the tax credit. the second question is with the new tax credit for homeowners that the president is due to sign would our son still be eligible to receive this if we co-sign on the loan. we are already homeowners. the third question is that when he is ready to take over the full amount of the payment can we sign over our portion of the house to him without him having to refinance? thanks
Hi Guest,
I don't think you or your son will get a tax credit. This is because, only first time home buyers can get a tax credit. As you have another property, you will not qualify for a tax credit. And as you are a co-borrower for you son's mortgage, I don't think you son will even qualify for a tax credit.
As far as I know, your son will have to refinance the property when you wish to transfer the mortgage in his name. If he doesn't, then your name will remain in the mortgage and you will be liable to pay the dues if your son cannot.
Thanks,
Jerry
I don't think you or your son will get a tax credit. This is because, only first time home buyers can get a tax credit. As you have another property, you will not qualify for a tax credit. And as you are a co-borrower for you son's mortgage, I don't think you son will even qualify for a tax credit.
As far as I know, your son will have to refinance the property when you wish to transfer the mortgage in his name. If he doesn't, then your name will remain in the mortgage and you will be liable to pay the dues if your son cannot.
Thanks,
Jerry
i'll disagree with jerry in that i believe that your son ought to be able to claim the tax credit. what you should do is contact a trustworthy tax advisor, or the irs directly, to ask that question and receive a definitive answer.
as for your taking a deduction on the interest paid, the lender will issue a statement on an annual basis concerning the interest paid to the primary borrower only. i would presume that your son will be the primary borrower, and that he will therefore be the only one who can claim that interest as a tax deduction. again, if you have doubts about this, speak with a tax advisor or the irs.
if you are non-occupant coborrowers, i'd think that you'd not be going on the title to the property. how your lender construes this, i don't know. if, however, you'll be on title, then your question concerning transferring ownership to your son as a sole owner would apply. yes, i would have to agree that you can certainly take that action at any point in the process. keep in mind that his lender may well insist on a refinance of the mortgage at that time, to his name only.
in practice, many borrowers neglect to advise their lenders of changes in title, and most lenders are not in the business of monitoring these changes, anyway. as a result, there are undoubtedly thousands of borrowers who never refinance when a change in title occurs. i'm not advocating keeping the information from the lender - just stating what happens in many cases.
as for your taking a deduction on the interest paid, the lender will issue a statement on an annual basis concerning the interest paid to the primary borrower only. i would presume that your son will be the primary borrower, and that he will therefore be the only one who can claim that interest as a tax deduction. again, if you have doubts about this, speak with a tax advisor or the irs.
if you are non-occupant coborrowers, i'd think that you'd not be going on the title to the property. how your lender construes this, i don't know. if, however, you'll be on title, then your question concerning transferring ownership to your son as a sole owner would apply. yes, i would have to agree that you can certainly take that action at any point in the process. keep in mind that his lender may well insist on a refinance of the mortgage at that time, to his name only.
in practice, many borrowers neglect to advise their lenders of changes in title, and most lenders are not in the business of monitoring these changes, anyway. as a result, there are undoubtedly thousands of borrowers who never refinance when a change in title occurs. i'm not advocating keeping the information from the lender - just stating what happens in many cases.
