Expert: Dick Dennis - 6/5/2009

Question
QUESTION: My daughter and I own a house together. When she got married I gave her my 1/2 and took the equity to build myself another small house. I want to be able to claim Homestead on my house but I am still on the house with her. Rather than her having to refinance the house to get it all in her name can I deed the house to her or gift it to her? Thanks so much!

ANSWER: You have confused me, Judi. You said you gave her your half of the house you owned with your daughter. Therefore you no longer have any equity in that house. Yet you said you took the equity to build another small house. Huh? If I can get the answer to that puzzle, perhaps I can answer the rest of your question, Judi. If you already gave her your half of the property, how can you deed her your interest in the property or gift it to her? For what it is worth, you are allowed to gift property to anyone you choose at the rate of $13,000 per year. If that will help you. I would recommend you talk to a tax expert like a CPA or tax attorney if this is not clear. If I get the answer to the rest, I can then address your total question. I do wish you well.

Dick Dennis
dixiedee13@aol.com

---------- FOLLOW-UP ----------

QUESTION: Sorry to confuse you. I still show on title as 1/2 owner of the house. All I asked of her was that I could take 35,000 of the equity to build myself a house. I have been paying back the equity tho. I wanted to be able to claim the Homestead on my house now so need to get my name off the title. We didn't want to have to refinance it to do this. Is there anyother way?  Hope this makes sense. :-)

Answer
We're getting close, Judi. Apparently when you gave your half of the property to your daughter YOU DID NOT record the change in title. Therefore, you actually never gave your daughter your half of the property. Otherwise, you would still not be shown as half owner of the property. In order to use equity as you have described, you would either have to sell the property (which I presume that is not your aim), or you would have to finance or re-finance the property (which is also not your choice) to use that money derived to pay for the house you want to buy for yourself. However, the lender would probably require that you be on the loan with your daughter (banks usually look for the most security as possible unless your daughter has excellent credit and a very good job).

Yes, there is another way of accomplishing your aim, but you would need lots more sophistication in the ways of real estate, so much so that you would not have asked me these questions in the first place. Plus it would cost you more than what a bank charges for the loan.

As long as your name is on the house at present, you would not be able to claim a homestead on your new house, as you know. You would have to take your name off the title to the property, plus if you would get a loan to buy your new house, the lender (or bank) would ask you why is your name still on the loan of the old house.

It sounds like you attempted everything without an attorney, therefore, I strongly suggest you talk with a good local REAL ESTATE attorney to accomplish your goals. He/she would make sure that your interests are protected and would apply any local laws or regulations that are required. I do wish you well.

Dick Dennis
dixiedee13@aol.com