Rather than co-sign a
mortgage for their child, which saddles them with the responsibilities
of a home loan but robs them of the rewards, parents could become
co-owners. This helps the son or daughter overcome the down-payment
barrier and purchase a larger first home. Parents, meanwhile, reap the
benefits of what is essentially an investment property for them.
Parents will have to actually rent the home to the
child in order to qualify for any tax deductions. But both parties can
enjoy the tax deductions, appreciation, and sales profits until the
child becomes the sole owner.
Some industry insiders, however, say co-ownership
arrangements are risky. Not only will the loan carry a higher interest
rate, but complications may also arise if the child marries and
divorces or if the parent or child decides to sell the property and
keep the profits following a family dispute.
"Buying a House With a Parent's Help," Scripps
Howard News Service (06/19/03); Curry, Pat.
Abstracts Copyright © 2003;
Information Inc., Bethesda, Md.
