Cosigning with child on a home mortgage - can I claim it as an investment property

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plan to buy a second house under my name for my child to live in and rent it to him and claim it as an investment property. However there are of course higher rates associated with a loan on an investment property. Can I instead cosign a loan with my son, and since he is the primary house resident, get the non-investment interest rate and claim the house as an investment propoerty on my taxes?

Mortgage and tax fraud - a two-fer.

How is it mortgage fraud. The reason for the higher interest rate is that you may not get a renter that can pay etc. If you are a primary resident, you are less likely to default. Child is resident.
How is it tax fraud? Owner is parent and pays for all maintenance costs and interest and mortgage.

If this argument were compelling, I'm sure OP could make it to the bank and the bank would offer her a lower interest rate.

It is fraud because clearly the bank considers this set up higher risk and wants to charge a higher rate for it, and OPs plan is to lie to the bank about it to get the lower rate. The fact that you disagree with the bank's mehedology doesn't mean it's not fraud to deceive the bank. By that logic, if you're totally sure you can pay back a loan, it is not fraud to make up collateral that doesn't exist.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plan to buy a second house under my name for my child to live in and rent it to him and claim it as an investment property. However there are of course higher rates associated with a loan on an investment property. Can I instead cosign a loan with my son, and since he is the primary house resident, get the non-investment interest rate and claim the house as an investment propoerty on my taxes?

Mortgage and tax fraud - a two-fer.

How is it mortgage fraud. The reason for the higher interest rate is that you may not get a renter that can pay etc. If you are a primary resident, you are less likely to default. Child is resident.
How is it tax fraud? Owner is parent and pays for all maintenance costs and interest and mortgage.

If this argument were compelling, I'm sure OP could make it to the bank and the bank would offer her a lower interest rate.

It is fraud because clearly the bank considers this set up higher risk and wants to charge a higher rate for it, and OPs plan is to lie to the bank about it to get the lower rate. The fact that you disagree with the bank's mehedology doesn't mean it's not fraud to deceive the bank. By that logic, if you're totally sure you can pay back a loan, it is not fraud to make up collateral that doesn't exist.

What's the lie? The child is cosigner, and lives in the house. Nothing about that is untrue.

[Anonymous]

This was my suggestion, above, but then OP can't deduct the expenses, taxes, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plan to buy a second house under my name for my child to live in and rent it to him and claim it as an investment property. However there are of course higher rates associated with a loan on an investment property. Can I instead cosign a loan with my son, and since he is the primary house resident, get the non-investment interest rate and claim the house as an investment propoerty on my taxes?

Mortgage and tax fraud - a two-fer.

How is it mortgage fraud. The reason for the higher interest rate is that you may not get a renter that can pay etc. If you are a primary resident, you are less likely to default. Child is resident.
How is it tax fraud? Owner is parent and pays for all maintenance costs and interest and mortgage.

If this argument were compelling, I'm sure OP could make it to the bank and the bank would offer her a lower interest rate.

It is fraud because clearly the bank considers this set up higher risk and wants to charge a higher rate for it, and OPs plan is to lie to the bank about it to get the lower rate. The fact that you disagree with the bank's mehedology doesn't mean it's not fraud to deceive the bank. By that logic, if you're totally sure you can pay back a loan, it is not fraud to make up collateral that doesn't exist.

What's the lie? The child is cosigner, and lives in the house. Nothing about that is untrue.

If the child is living there and paying OP rent, it is not OP's primary residence.

[Anonymous]

Anonymous wrote:This was my suggestion, above, but then OP can't deduct the expenses, taxes, etc.

What is the argument that it cannot be? It's still an investment property with expenses and maintenance that the parents still pay for entirely. The cosigner happens to live in it versus a stranger. As long as the cosigner (child) does not ALSO try to claim the interest tax deduction then it should be fine to the IRS.

[Anonymous]

For tax purposes, in order to deduct expenses the way you would for a normal investment property (i.e. To a non family member), you need to charge your family member the normal rent for the area. So if a condo rents for $1000/month, you need to be close to that number. Otherwise, the IRS will treat the residence as a personal residence and disallow any deductions other than mortgage interest subject to the limitation, and property taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plan to buy a second house under my name for my child to live in and rent it to him and claim it as an investment property. However there are of course higher rates associated with a loan on an investment property. Can I instead cosign a loan with my son, and since he is the primary house resident, get the non-investment interest rate and claim the house as an investment propoerty on my taxes?

Mortgage and tax fraud - a two-fer.

How is it mortgage fraud. The reason for the higher interest rate is that you may not get a renter that can pay etc. If you are a primary resident, you are less likely to default. Child is resident.
How is it tax fraud? Owner is parent and pays for all maintenance costs and interest and mortgage.

It is absolutely mortgage fraud. The bank charges a higher interest rate bc investment properties represent bigger risks than an owner occupied property.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plan to buy a second house under my name for my child to live in and rent it to him and claim it as an investment property. However there are of course higher rates associated with a loan on an investment property. Can I instead cosign a loan with my son, and since he is the primary house resident, get the non-investment interest rate and claim the house as an investment propoerty on my taxes?

Mortgage and tax fraud - a two-fer.

How is it mortgage fraud. The reason for the higher interest rate is that you may not get a renter that can pay etc. If you are a primary resident, you are less likely to default. Child is resident.
How is it tax fraud? Owner is parent and pays for all maintenance costs and interest and mortgage.

It is absolutely mortgage fraud. The bank charges a higher interest rate bc investment properties represent bigger risks than an owner occupied property.

What's sad is the casual way the OP writes about this. Like cheating banks and the IRS is something everyone does and he/she just needs some help on specifics. Basically saying I'll tell the bank one thing and the government another.