What are the implications of becoming a cosigner on a mortgage?
March 5, 2005 9:52 AM Subscribe
My parents asked me to become a cosigner on their house purchase (they don't have enough credit to get the house themselves). I am fully willing to accept the financial responsibility, but am wondering if there are any hidden caveats (especially with regard to IRS) that I should be aware of?
posted by blindcarboncopy to Law & Government (14 answers total)
I am currently renting a place, and have no intention of becoming a homeowner in the next few years. I also have a good job that affords me enough income/credit to buy the kind of place my folks want by myself, if I wanted to.
My parents do not have the credit needed to get the house they want (and since my mom is a mortgage broker, I know that she has explored every opportunity available), but they do have the ability to make monthly payments on the property. So they are asking if I'd cosign the loan with them. I trust them with financial matters completely, and am willing to shoulder the responsibility in the unforeseen events (e.g. if they become unable to pay mortgage for some reason, I have the savings to keep it floating for a while). What I am wondering is:
1) Are there any negative tax implications for me at the time of purchase?
2) Suppose I want to get my own house at some point down the road. My mom tells me that I can simply "take my name off the title" than. Is that really right, or would I have to arrange for a sale of my portion of the house, and pay fair-market tax on it?
3) I have a certain inkling of intention of quitting my job and going to grad school within a couple of years. This will almost certainly signal a transition from middle class to first hemorraging the savings and than living on loans (been there, done that, willing to do it again). Will being a part-homeowner hurt me somehow? Make me ineligible for financial aid?
4) I realize that the sort of advice I am seeking might best be asnwered by a lawyer. I have no idea, however, of how to look for someone that specializes in real estate tax law. Any ideas? I am in WA state if that matters.
Thanks in advance AskMeFi!