Expert: Lori Frankfort - 6/30/2008

Question
I am currently living with my parents in Los Angeles, CA and my parents would like to officially add my name to the Deed of the house so that I can receive homeowner tax breaks on my single salary income. I currently give them monthly rent but do not own any property.  I was told that I need to fill out a new Grant Deed or QuitClaim deed, preliminary change of ownership report and documentary transfer taxes.  Since my parents will still remain owners and I will just be an addition, how do they go about adding my name without any real tax implications? Do they have to give part of the house as a percentage to me as a gift? Or can we just be 3 equal owners of the house? If they give ownership as a gift, what tax implications are there for me and/or my parents? When they want to sell the house in the future and I do not live in the house anymore, how does this affect my taxes?

Answer
The easiest and most efficient way to implement the change is to contact an escrow company to handle it for you.  It is my understanding, however, that just being on the deed isn't going to change your tax status.  You would need to be on the mortgage itself to see any real benefit.  Without being on the mortgage you will only be able to write off a portion of the property taxes, not the mortgage interest.  You can inquire about this with the escrow company.  

When they want to sell the house in the future you will have to sign all documentation for the sale in addition to their signatures, and the escrow company will report the sale to the IRS with all of your names on it.