HELOC- sale to son
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HELOC- sale to son (by Omar [MD]) Feb 7, 2024 7:28 PM
       HELOC- sale to son (by 6x6 [TN]) Feb 7, 2024 7:40 PM
       HELOC- sale to son (by WMH [NC]) Feb 7, 2024 7:42 PM
       HELOC- sale to son (by Bonanza [NC]) Feb 7, 2024 8:08 PM
       HELOC- sale to son (by plenty [MO]) Feb 7, 2024 8:43 PM
       HELOC- sale to son (by BRAD 20,000 [IN]) Feb 7, 2024 10:06 PM
       HELOC- sale to son (by Omar [MD]) Feb 8, 2024 9:57 AM
       HELOC- sale to son (by Ray-N-Pa [PA]) Feb 8, 2024 11:23 AM
       HELOC- sale to son (by Ray-N-Pa [PA]) Feb 8, 2024 11:23 AM
       HELOC- sale to son (by BRAD 20,000 [IN]) Feb 8, 2024 11:38 PM

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HELOC- sale to son (by Omar [MD]) Posted on: Feb 7, 2024 7:28 PM
Message:

Hello all,

I am looking to sell one of my rental properties to my soon to be 18 year old son. I have a HELOC against this property where I owe almost $90K. What do you think is the best approach to facilitate this transaction. Have him apply for a loan and I would be the co-signer on the loan and sell the property at a discounted rate? Are there tax implications if I pay off the property and gift it to him. I have had this property for 8 years as a rental. I wanted to try and get this property into his name and avoid using a real estate agent. The HELOC is not assumable unfortunately. --69.143.xx.xxx




HELOC- sale to son (by 6x6 [TN]) Posted on: Feb 7, 2024 7:40 PM
Message:

I would like to see what Ray says about this.

I'm thinking put it in a land trust and make your son the beneficiary? I don't know though. Just a thought. --73.190.xxx.xxx




HELOC- sale to son (by WMH [NC]) Posted on: Feb 7, 2024 7:42 PM
Message:

If you sell it to him outright it's a sale like any other - you will have to pay off the HELOC and worse, you have to pay Capital Gains on the entire gain plus recapture all of your depreciation. Plus Plus Plus other taxes...ouch. It can be a LOT.

If you leave it to him in your will, it resets the basis to its value on the day you die and he can sell then without incurring the huge tax bite or the depreciation recapture.

However he's so young that's a long time to wait...but if you *gift* it to him now, he is stuck with YOUR basis and selling it later will incur capital gains taxes, etc. for him. Again, ouch.

One way is to sell it to him with you holding the mortgage. That way you only pay taxes on the money you collect in interest each year, and I don't think you have to pay the full depreciation all at once either BUT I don't know that part for sure.

I'd consult a tax and estate pro. A few dollars spent today for expert advice can save multiple thousands later.

We have put our properties in trust and the kids will get them when we die. But we - and our kids - are much older and they won't have to wait so long for us to die! --173.28.xx.xxx




HELOC- sale to son (by Bonanza [NC]) Posted on: Feb 7, 2024 8:08 PM
Message:

Wouldn't it make more sense for him to buy a duplex or SFH and get a 1st time home buyer loan with a low interest rate? --65.188.xxx.xxx




HELOC- sale to son (by plenty [MO]) Posted on: Feb 7, 2024 8:43 PM
Message:

Why can't you help him buy another property? Or just give him the keys and the income and expenses and you just keep the debt as it is. He's the manager and gets paid, you just hold your position on paper as it is ? --172.59.xxx.xxx




HELOC- sale to son (by BRAD 20,000 [IN]) Posted on: Feb 7, 2024 10:06 PM
Message:

Omar,

I started young but at 18 I am nervous about his level of maturity. Also concerned about his stability - job? College? Marriage?

I tried to buy a house for my three kids who were all at the same college. Glad I didn't. One joined a sorority, one joined a frat, one wanted to stay with his buddies. The house was MY dream to save money.

Examine your intentions. I cannot count how may parents call me because ?their well meaning gift or co-signing on a house to their offspring has turned sour - a squatter or such.

Are you wanting to do this FOR him or your own gratification?

Never ever NEVER co-sign for ANYONE!! EVER!! Even God instructed us in the Bible to not co-sign.

If he is not able to get his own loan he is not ready for ownership. If you want to help, help him get a loan. The learning experience will be invaluable.

BRAD --73.103.xxx.xxx




HELOC- sale to son (by Omar [MD]) Posted on: Feb 8, 2024 9:57 AM
Message:

Thanks everyone for the great feedback. My son has sentimental attachments to this house. The objective was to get the house into his name and also me paying off the HELOC balance. We would continue to rent the property but now everything would be under his name and not mine. When he finishes college, he would then move in and become the primary resident. Finding the best option here has been racking my brain. I will most likely consult with an attorney on best strategy that is most favorable with tax implications. --69.143.xx.xxx




HELOC- sale to son (by Ray-N-Pa [PA]) Posted on: Feb 8, 2024 11:23 AM
Message:

If you place the property into a land trust today, then tomorrow sell the beneficial interest of that same property to your son, with you or better yet your LLC as trustee - you could work around the due on sale clause.

Do you still need the LOC? If so why are you selling that specific property? You can work around a due on sale clause, but why do it if you have a different property where you could just transfer the colleterial? The bank would give you an assignment of colleterial form to fill out --24.101.xxx.xxx




HELOC- sale to son (by Ray-N-Pa [PA]) Posted on: Feb 8, 2024 11:23 AM
Message:

If you place the property into a land trust today, then tomorrow sell the beneficial interest of that same property to your son, with you or better yet your LLC as trustee - you could work around the due on sale clause.

Do you still need the LOC? If so why are you selling that specific property? You can work around a due on sale clause, but why do it if you have a different property where you could just transfer the colleterial? The bank would give you an assignment of colleterial form to fill out --24.101.xxx.xxx




HELOC- sale to son (by BRAD 20,000 [IN]) Posted on: Feb 8, 2024 11:38 PM
Message:

Omar,

Money decisions should avoid emotion. I hear two emotions going - love for the son and sentimental about a building.

Sentimental is temporary. A year or two later the sentimentality fades and it becomes an albatross.

It's just a house. And it will have been a rental.

When he graduates he may take a job out of town or get married and move.

Rent the house, use the rent to pay off your loan or refi.

Or sell it and use the money to pay off his student loans.

BRAD

--73.103.xxx.xxx



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