Legal Question in Real Estate Law in California

Re: what if i buy a house and immediately sell it to my boyfriend?

Assuming you mean that you have an assumable loan, the lender still has the right to refuse to let someone with bad credit assume that loan. So once they do, they will cancel the loan. They will find out as soon as you record the transfer of title documents.

What tax benefits are you expecting to reap? Mortgage interest and property taxes are tax deductible, but you have paid hard cash for them. How does paying $1 in tax so that you can reduce your taxes by $.33 cents [for a 33% effective tax bracket]make any sense? Of course, if he means that you pay the mortgage and he takes the deduction, that makes a lot of sense; it means you are being used. If you are willing to buy a house with him, which is a very big step, is he also willing to make the economic commitment of buying you a ring? If not, and you want him to, is he really the type of person you want to go into business with? I am not being a prude, but I do not see anything but economic loss for you and gain by him at your expense.

Re: what if i buy a house and immediately sell it to my boyfriend?

Why does someone with bad credit need a tax writeoff? Needing tax shelter is usually a characteristic of wealth.

The only tax benefits of home ownership are the deductibility of payments actually made for mortgage interest and property taxes. The burden of making the payments is several times greater than the benefit from deductibility, and the lower his income, the smaller the benefit, because he's in successively lower tax brackets.

Further, how is he going to pay you for the house if you sell it to him?

If he pays you less than fair market value, for example nothing at all, the entire transaction would likely be attacked soon after the deed hit the recorder's office as a sham and a fraud on the creditor.

You should not use your money or your credit to buy a house and then transfer it to someone for less than fair market value unless you are content with the notion that in doing so you are making a huge gift. The IRS might be asking for gift taxes at some point...you would be primarily liable for the tax, and if you didn't pay it, the IRS could go after him.

All in all, it looks to me as though you are being groomed to make an unwise decision based on fallacious logic. I would urge both of you to see a tax advisor or lawyer near you. At the very least, have a written contract covering all aspects of your deal including who gets what if the deal goes sour for any reason, which might include that you split up in 30 days or 30 years (for example, one of you may die before the other), or that the deal doesn't work for tax reasons you didn't know about, or the mortgage contains covenants and conditions you didn't consider such as a due-on-sale clause (there may not be a prepayment penalty but there may be, nay probably is, a payoff requirement unless the buyer is able to qualify for the loan same as you did, or better.

I don't want to discourage you from doing this, but you need to do it fully informed and aware of the loan and tax rules, and you both sound somewhere between misinformed and uninformed.