Discussion:Non Title & Loan Holder for a property?

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Discussion Forum Index --> Tax Questions --> Non Title & Loan Holder for a property?


P&R CPAS (talk|edits) said:

31 August 2006
My client took over loan payments for his friend to avoid foreclosure, however his name does not appear on the settlement statement nor a the loan. He basically, took ownership of the property, with a verbal agreement that he will pay the past month owned and take over the loan and the owner agreed that he can keep the house and in the future he will transfer the title to his name. I adviced the client that it will be best not to include this property, since his name does not appear on the title or loan. Is there another alternative to this situation, my client is paying monthly mortgage payments, collecting rent, paying property....


Thanks

Dennis (talk|edits) said:

31 August 2006
Sounds like a reportable transaction to me -- debt assumed as purchase price. ♫

WesR (talk|edits) said:

31 August 2006
Hi what a mess.I dont necessarily agree with Dennis. You have nothing in writing so maybe the real owner has no intent to "transfer in the future". Maybe we have just a gift situation? Is your client just the "agent" for the true owner? I dont think you can just assume the debt is the purchase price and use that as cost on your clients tax return without true title. As Dennis would say "I would vote" for non reporting and treat your client as the agent. Is he keeping any extra cash flow or adding cash to make up the deficit? Does your client intend to get his money back somehow from his "friend"? Give the friend an accounting at the end of the year and let him worry about it if your client has not gotten any economic benefit and has no legal rights. Maybe if he has kept some cash treat it as management income to your client and an expense to the true owner. Until legal control is transferred I wouldnt report a thing unless your guy keeps a "management fee". Treat as an agent. Whew I am tired. bye

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