So my parents decided to buy a house for my sister and I for college as we go to the same school. I worked with a buyer’s agent to buy a house (my parents don’t understand English well). I chose the house and had my parents sign papers (of course I explained things to them).
I did some research and found some pros and cons.
PROS
"With their name on the title, IT CREATES A CREDIT HISTORY FOR THEM. If the student is working and generating taxable income, then some TAX BENEFITS would accrue . . . And they might be able to EXEMPT CAPITAL GAIN . . .
http://realestate.msn.com/Buying/Article_bankrate.aspx?cp-documentid=5674749>1=10632
CONS
If the child has debts, collectors can go after the property.
(I’m not too worried about this scenario as I only have government student loans.)
If the child is on the title, they can be sued for their portion of the house.
(I somehow I was sued, would it be better to have joint tenancy or fee simple?)
Fee simple and joint tenancy are not the same type of thing–you are talking apples and oranges. Think of fee simple as how good a hold you have on the property. You hold 100% rights to the property. You can do with it what you will. Most property in the U.S. is held this way but worldwide there are many forms of ownership that limit your ownership rights. Do a google search on fee simple and read the definition of it.
Joint tenancy involves how those rights are passed to another party in the event of the death of an owner by declaring how those rights are held while the owners are alive. Again, there are several types of joint tenancy that have different results–i.e. the property may be passed to other owners("with right of survivorship" which is the most common joint tenancy) or goes to the estate of the deceased where a will takes over distribution("tenants in common"). Again, you should do a search(Wikipedia works also) for joint tenancy and read up and educate yourself as to the different outcomes of each type of ownership and then decide for yourself what will work best.
Don’t make any decisions based on what you read on this board–we are not experts and this is too big a decision to be made lightly. One last thing–it may be best if you consult a lawyer if you still have any questions or doubts. Good luck!
I think you and your parents should sit down with an attorney about this, maybe also an accountant. But if you can’t afford the payments yourself that is something to be concerned about. And don’t assume student loans can’t attach to your house either (but you would be in repayment and default for that to happen).
References :
Fee simple and joint tenancy are not the same type of thing–you are talking apples and oranges. Think of fee simple as how good a hold you have on the property. You hold 100% rights to the property. You can do with it what you will. Most property in the U.S. is held this way but worldwide there are many forms of ownership that limit your ownership rights. Do a google search on fee simple and read the definition of it.
Joint tenancy involves how those rights are passed to another party in the event of the death of an owner by declaring how those rights are held while the owners are alive. Again, there are several types of joint tenancy that have different results–i.e. the property may be passed to other owners("with right of survivorship" which is the most common joint tenancy) or goes to the estate of the deceased where a will takes over distribution("tenants in common"). Again, you should do a search(Wikipedia works also) for joint tenancy and read up and educate yourself as to the different outcomes of each type of ownership and then decide for yourself what will work best.
Don’t make any decisions based on what you read on this board–we are not experts and this is too big a decision to be made lightly. One last thing–it may be best if you consult a lawyer if you still have any questions or doubts. Good luck!
References :