need schoolling

please advice.

the numbers:

own two properties free and clear.

  1. comps at 145,000 (primary residence 10yrs)
    taxes 1,200
    insur 1000

  2. comps at 190,000 (bought it for my son, as his primary residence)
    taxes 3,000
    ins 1200

FICO at A+
but retired so on fixed income.
No debts

The goals:

  1. buy another property to be my primary residence,(comps at 190,00) and move out of my current one.

  2. attempt to do this with no money out of my pocket,
    and manipulate equity so i wont have additional cashflow expenditures per month.

  3. my son needs to tap into the the equity of his home.
    this property is titled in both our names. He also needs a tax shelter.
    he’s planning on tapping 160,000 and giving me 100,000.

  4. my current home needs 10,000 in repairs and improvements.
    willing to rehab and either sell or rent.
    Rentals are about 900 per month.

how can I get the home i want, without having to pay a mortgage again?
I thought about a cash out refinace to buy the new house and pay for it in cash, but i cant use the loan amount as a tax deduction?

How can i or my son tap into the equity and make it tax decuctible?
i need schoolling!


  1. The most equity your son can tap and still deduct all of the interest is $100,000.
  2. Nothing is free. A deal like this is going to require a banker, a title agency, an acountant, possibly an appraiser and a lawyer.


  1. Have your son quit claim his property to you.
  2. Sell the home to your son for $160,000.
    -You now have the $100,000 you want from your sons property-
    -Your son now has the $160,000 mortgage and the deduction.-
  3. Pull $70,000 of the equity out of your home.
  4. Gift $60,000 to your son*.
  5. Put $10,000 towards repairs.
  6. Sell your home for $190,000(?)
    -You now have $100,000 from your son’s property and
    $120,000 from the sale of your home. ($240,000)
  7. 1031 into a new home $240,000+

TITLE AGENCY FEES- Aprox. $3,500-$4,500
LENDER FEES- AProx. $1,500-$2,000
COUNTY FEES- Aprox. $300

*Your son has recieved a taxable gift and if reported one of you is liable. This tax is called “the federal gift tax”. After deciding who will pay this tax you may want to restructure the deal to compensate one or the other.

This is about as good as it gets from what I can tell. Maybe somone else can do one better.


Pat Lawson

thanks pat for the feedback.

On this scenario I will end up selling 2 homes.

  1. my son’s home–for 160,000
    and then my home which only comps at 145,000
    (not 190,000 in your scenario)

would i end up paying taxes on both properties?
My sons home is not my primary residence,
I can see how i would be excluded on my home,
will the 1031 apply to my sons home?

I really appreciate the different perspective you bring.
or anyone in that matter.

thanks in advance

Joe :banana: :banana:

No tax implications on the sale of the homes. You can sell two, three, four homes, etc and still use the 1031. Since YOU would be selling both homes, and YOU would be realizing the capital gain from the sale of both homes you will have no problem with a 1031. Federal gift tax may apply to the $60,000 gift to your son, contact your accountant. Remember after the sale you have 45 days to target a new home to purchase and 180 days to close on the new home. This must be timed exactly right.

P.S. - 1031 does not require that the property being sold is your primary residence… that is a different tax break.