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(John) wrote in message . com...
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. The
house will be under their name as the owners. They already own their
own home. Will this be considered rental income for them? Is the
interest tax deductible for them or me? I will eventually get a loan
to pay off theirs. If they sell the house to me below market value,
will I be taxed on the gain? Is there anything else that we need to
consider before proceeding? Thanks...

The interest will be tax dectuctable to THEM, not YOU.

When you get the loan, the end of year mortage reporting to
the IRS is done on the primary loan holders SSN. So it would
go to your parents in this case.

It could be considered rental income for them, which in that
case it wouldn't be tax deductable, property taxes would be
charged at the commercial(rental property) rate, and your
insurance would be higher. They would have to depriciate
the value of the house on their taxes also. When they sold
it they would have to pay capital gains taxes on the house
since they didn't reside there 2 or the last 5 years as required
for a residence per IRS laws.

THE BEST THING TO DO, is for you to get the house loan in
your name with them as the "co-signers" on the loan. The
creditors will like this as they can now hold a person with
better credit scores responsible for the loan, but your
name is on it also, which builds credit for you. Since you
would be the primary name, you can claim the tax credit and
homstead exemption.

hope that helps some.
John