Author Topic: Pls need advice.Step-by step to take when paying off parents mortgage with HELOC  (Read 960 times)


  • 5 O'Clock Shadow
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  • Posts: 1
Hi mustachians, question for you all

Im trying to payoff my moms house with a heloc from my primary residence. How do i go about doing this. Is there going to be tax implications and whats the best strategy. Tax wise and investing wise Thanks

I plan to pay of her remainding loan with a heloc on my primary house. I will then collect rent from her to accelerate the paydown of the loan. How do i transfer the title of the house to my name. Should i even do that before i pay it off or after. Just want to make sure the IRS doesnt bite me in the end. Pls help. Thank you guys!

I am in california
« Last Edit: July 02, 2016, 04:28:32 AM by Thinkofmybaby »


  • 5 O'Clock Shadow
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  • Posts: 80
What did you end up doing with this?  If it's still an open issue, I had a couple of questions and some comments.

You said you're paying off your parent's house with a Heloc on YOUR house?  Seems risky.
You say that after doing so, they will pay you rent.  Does this mean, that they're selling the house to you?  That wasn't clear.  You did mention putting it in your name, but I wasn't sure if you meant adding you to the deed or taking full ownership.

There can be some tax issues for you if you don't do it "right".  Are they selling it to you for the price of their outstanding loan balance?  Is this near market value?

Check with an accountant, but there may be cost basis issues for you.  For example, if part of the is adjusted under the "gift tax" rules, then your parent's cost basis for purchasing the house can become yours.  So if they bought the house in 1970 for $30k and now it's worth $200k and you sell it in a few years because they don't need it any more you could be looking at a huge capital gain.

There are some exceptions like if you live in the property for at least 2 years before selling it, then you can exclude part of the gain from taxes(like 250k single/500k couple).

If they leave the house to you as an inheritance, then the cost basis gets adjusted(stepped up) to the value at the time of death.

Again, I'm not an accountant, nor do I play one on TV.  Check with one.