Expert: Dick Dennis - 11/1/2008

Question
We plan to buy a condo with our young adult son.  We plan to buy as joint tenants.  Parents and son will be on the mortgage.  Parents will be paying most of the bills and putting up the down payment.  Parents plan to deduct the mortgage interest (to the extent we pay).  Can the son take the first-time homebuyer credit (parents not eligible)?  Any problems with this plan?  Suggestions?

Answer
Here is a suggestion, Mike: Talk with an ESTATE attorney and check on the feasability of having a Revokable Living Trust own the condo. You and your wife would be the main co-trustees and your son as the successor trustee. You would want your financial agreement for payment of the mortgage down in WRITING. People's attitudes and memories change over time.

Should anything happen to any one of the trustees, nothing is changed as far as ownership or mortgage responsibility. The attorney would create in the trust who becomes the main trustee(s). You will need to buy the condo the regular way because the lender will frown on a trust being responsible for the mortgage. Once the property is bought, the loan is placed you can then transfer the title to the trust. The attorney will explain.

I believe your son would be able to take the first-time homebuyer credit. But do not take my word for it. Check with your CPA or tax expert. You son may be able to take only one-third credit. I wish you well.

Dick Dennis         dixiedee13@aol.com