In article , (John) wrote:
I do not have the credit yet to get a home loan. My parents want to
buy a house for me but I would be making the mortgage payments.

Baaaad idea for all of you. If you default -- I know, I know, you wouldn't do
that to your parents, not on purpose anyway, but what if you lose your job, or
become disabled? -- then their credit rating gets damaged. Meanwhile, you
aren't building up your own credit history. Furthermore (and no offense is
intended -- try to take this as advice from an older brother or a favorite
uncle), it doesn't help your development as an independent adult, either.
You'll feel better, five or ten years from now, if you don't do this. Trust
me.

The
house will be under their name as the owners. They already own their
own home. Will this be considered rental income for them?

Income of some sort, anyway. The debt will legally be theirs, and you're
paying it for them. That's taxable income for them.

Is the interest tax deductible for them or me?

Maybe *neither*.

Unquestionably *not* for you. IRS publications are *quite* specific about
that: you cannot legally claim a deduction for interest on a loan which you
are not obligated to repay.

Possibly not for them either. If they make the payments to the lender, and you
reimburse them, probably yes. If you make the payments to the lender,
then definitely not: if they didn't pay it, they can't deduct it.

I will eventually get a loan to pay off theirs.

When you're able to qualify for a loan, is the time to be buying a house. Not
before.

If they sell the house to me below market value, will I be taxed on the gain?

Hoo-boy. It gets complicated here. Better consult an attorney and/or an
accountant. But here's my take: Since the house would be your principal
residence and *not* theirs, any capital gain from the sale is _fully_taxable_
to them. If they sell the house to you below market value, they could be
buying some trouble with the IRS if they attempt to claim a capital *loss* on
the sale (or report a smaller gain than they would have achieved had they
sold it at market value). And the IRS may view the transfer at below market
value as taxable income to you, in the amount of the difference between fair
market value and the transfer price.

Is there anything else that we need to consider before proceeding?

Isn't that *enough*? :-) IMO, this is *not* a good idea at all. If you're
determined to do it anyway, talk to a lawyer and and accountant first.

Thanks...

Are you sure? :-) Probably not what you wanted to hear... Good luck.