Structuring an Apartment Purchase

Q: My wife's parents, who are very kind and generous, would like to contribute $300,000 as a downpayment toward our purchase of a $1 million apartment in New York City. My wife and I would take out a mortgage in our names for the remaining $700,000 and pay the mortgage and the $1,000 per month common charges/real estate taxes.

It is our intention that... my wife's parents would get a complete return on their investment, plus a portion of the profits, when we sell the apartment. Meanwhile, my wife and I would be able to write off the interest on our mortgage and hopefully get a return on the property, rather than continuing to throw money into the bottomless rent pit as we have for the past seven years.

I was hoping you might be able to provide some advice on how best to structure this arrangement so that we pay as little taxes, if any, as possible. Thanks in advance.

A: You can set it up so that they own 30% of it and you own the other 70%.
The deed would need to be tenents in common.

The only problem that I see with that is that the mortgage company wouldn't view the parents contribution as your equity and may want a down payment. That might be able to be taken care of if the parents were to cosign the loan or offer their portion of the condo as collateral.

That way the $300k isn't a gift and they automatically receive 30% of the proceeds of any sale.

Of course, it's worth talking with a CPA and real estate attorney to make sure.

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