Smart son reaps real estate tax benefits of parents' home

Tricky part is adding name to title
By: Robert J. Bruss: Inman News
DEAR BOB: I live in my parent's house. Instead of paying them rent, they suggest I pay a portion of their mortgage directly to the mortgage company each month. If I pay $500 each month, can I use the $6,000 annual total payments as an income-tax deduction each year even though my name isn't on the mortgage or the title? – Roger K.

DEAR ROGER: Congratulations on choosing very smart parents who are looking out for your best interests.

However, to be entitled to deduct on your income-tax returns any mortgage interest and/or property taxes you pay, you must be legally obligated to make those payments. That means your name must be on the home's title.

Your parents can add you to the title by signing and recording a quit claim deed. It really doesn't matter what percentage interest they gift to you or how you hold title. If you are their only heir, they might want to add you as a joint tenant with right of survivorship to avoid probate when they pass on.

But your name need not be on the mortgage obligation so don't bother contacting the lender. Of course, keep your cancelled checks to be able to prove your actual payments just in case the IRS audits you on this issue. For more details, please consult your tax adviser.

CAN SON EVICT MOTHER FROM HIS PROPERTY?

DEAR BOB: My question concerns a neighbor friend. She is a widow who built a small house on her son's property. Now he wants her gone off his land. He sent her a registered letter (on lined notebook paper) stating he will have the sheriff take her off the property if she isn't gone by the end of the month. She has no deed to her little house but through an agreement with her son has paid his property taxes for the last 12 years. She is 72 and is very upset and frightened. Her son is a very cold person. What should she do? – Nettie G.

DEAR NETTIE: As a neighbor and friend, you should advise her to consult the best real estate attorney in town to preserve her legal rights. I hope she has disinherited that nasty son.

From your description, her legal rights are unclear. There are many legal theories her attorney might use, such as promissory estoppel based on her son's promises to allow her to live on his property and her payment of the property taxes. There might also be a prescriptive easement or even adverse possession since she paid the property taxes.

"FIRST SHOWING RULE" RARELY APPLIES

DEAR BOB: About four months ago, I had a buyer's agent who showed me a house. At the time, I didn't like it. After several months of no phone calls, I dropped that agent. Then, last month another agent showed me the same house and I realized it could be right for me so I made a purchase offer through the second agent. It was accepted by the seller. The sale closed. Now the first agent claims I owe her half of a sales commission because she first showed me the house. Can she sue me? – Mark W.

DEAR MARK: Anyone can sue anyone. But bringing an unsuccessful lawsuit can result in costly malicious prosecution lawsuit damages. I doubt your first agent will sue you.

Very few, if any, local real estate associations still have a "first showing" rule for their members. Years ago, it was popular. But there were so many problems, it has been abandoned by 99 percent of local real estate associations.

Without a legal justification, that first agent has no legal grounds for suing you. If the local association of Realtors still has such an antiquated first showing rule, the first agent's grievance is against the agent who sold the home to you. For full details, please consult a local real estate attorney.

The new Robert Bruss special report, "The 10 Key Questions Condo Sellers Hope Buyers Don't Ask," is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.