[jamie14]

As the title says, I would like to buy a mobile home for a friend and his family. This would be more of a loan than a gift. I would prefer to avoid a rent-to-own scenario as I do not want to incur repair expenses over time. Basically, I would like to buy it, put it in their names, and have them pay it off interest free at a couple hundred a month.

Additionally, I do not have a business license and the cost would come directly from my savings. I sold some property earlier this year and will have to pay about $16000 in capital gains taxes next year. All of this is individual and NOT business.

So, my question is this... What would be the best way to purchase this home and transfer it without increasing my capital gains or having any sort of responsibility to maintain the property? As my friends still owe me quite a bit of money from several years back, I was thinking about having my lawyer draw up a loan repayment contract and attaching the previous loan onto it. However, if we do this, would that immediately be considered profit, or would a simple clause cover the fact that the loan total was increased for an outstanding loan and nothing more? I was hoping to do a quick purchase then sale with an owner carry, but I am mostly worried about increasing my taxes and additional broker fees.

Lastly, if I just loan them the money to buy the thing outright and they agree to sign a repayment contract, is it possible to file a lien on the home immediately and enforce it when they decide to sell?

Any help is much appreciated. Thank you in advance.

[ScottGem]

The best way to avoid any tax consequence or responsibility to you is to loan them the money and have them sign a promissory note pledging the home as collateral for the note. Essentially a mortgage.

If you specify no interest, then you have no income from the loan so there should be no tax liability.

If you purchase the home in your name, then you have to sell it to them. Even if you sell it for the same price you paid, there will be additional filing fees and costs. If you don't want to be responsible for maintenance and repair you don't want it in your name.

[twinkiedooter]

Don't put the title in their name only. Put the title in their name and list yourself as the lien holder - otherwise you have just given them an essentially free mobile home. Then if they default on the loan to you the home will automataically revert to you. You need to look at the mobile home in the same way you would look at the purchase of a car, not real estate with a mortgage as a car does not have a mortgage but a chattel loan, the same as a MH would have, a chattel loan, not a mortgage.

[ScottGem]

Don't put the title in their name only. Put the title in their name and list yourself as the lien holder - otherwise you have just given them an essentially free mobile home. Then if they default on the loan to you the home will automataically revert to you. You need to look at the mobile home in the same way you would look at the purchase of a car, not real estate with a mortgage as a car does not have a mortgage but a chattel loan, the same as a MH would have, a chattel loan, not a mortgage.

While the advice is OK, the description is incorrect. Title indicates ownership. The OP does not want to be responsible for the home, therefore he does not want any part of ownership. So the TITLE needs to be in the friends name. By getting a promissory note pledging the home as collateral and registering that note as a lien on the home, the OP's loan is protected.

[jamie14]

Thank you so much for the advice! I will contact my attorney today and get the ball rolling.

[ScottGem]

Glad to help