Legal Question in Real Estate Law in Virginia
investment in houseing
My mother-in-law recently sold her house and is not planning on buying anytime soon. We are getting ready to buy a new home and were wondering if there was any way for her to help us with that purchase that would be advantageous to her, or help her to avoid capital gains. Could she own part of our home or the land on it and get the tax break, while we gain equity and have the tax break as well?
1 Answer from Attorneys
Re: investment in houseing
Your mother-in-law could enter into your purchase transaction as a co-purchaser of the property, taking title as a tenant-in-common with a(presumably) 1/3 undivided interest in the whole, and which would also entitle her to a proportionate tax deduction for her share of the interest paid on the mortgage.
However, you should also be aware that under this arrangement if any disputes arose between you and your mother-in-law in the future and that she refused to be bought out for her interest in the properety, she could petition the circuit court for a partition of the property which in all likelihood would result in an order requiring that it be sold and the proceeds distributed to the owners of record.
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