Can this be done in Oregon?

Question

So here's the situation, we have a family member that may be forced to sell her primary home. She is the sole owner of a SFR and owes around $150k on her mortgage. We're thinking of ways to keep her in the home for as long as possible and use equity in her home to help subsidize her living expenses.

Is there a way to add a second owner (joint tenancy) to the title and do a cash out refinance for between $200k - $250k with the new owner? If possible, can the financing be done with only one of the current owners? The home will easily appraise for $400k - $450k. This means there is somewhere around $250k - $300k in equity.

Does adding a second owner (joint tenancy) generally trigger a tax reassessment?

Can adding a second owner (joint tenancy) to title trigger a due on sale clause?

Are there any tax implications in a situation like this?

Looking forward to any responses from the creative minds out there!!

Mike Nuss · Answer

@Jay Hinrichs touche. Well said!!

Mike Nuss · Answer

@Jay Hinrichs Oregon has some amazing tax deferral and incentive programs. Senior deferral being one of them. Makes no sense why people complain about getting "taxed out of their property".

Jay Hinrichs · Answer

@Mike Nuss well one reason is they simply don't know.. they are not attending Rarebird and getting educated in the finer arts of the real estate game here in PDX>. that's the obvious answer !!!

Jay Hinrichs · Answer

@Neal Collins I have not really looked into reverse mortgages IE seen what the exact costs were... they may be some what sub prime ish... but its been in the back of my mind as I have a near paid off home in Lake O . but for me I think I just sell take the 500k tax free in equity gain I have and then live somewhere else..

Also OP you can freeze your prop tax's here in whats called senior deferral... @Mike Nuss all the foreclosure guys know about that.. its little known and or talked about in Oregon.. but its a thing.

Tyler Cope · Answer

@Neal Collins I had thought about ways to do a cash out refi under my name but wasn't sure how to do that without being on title. I didn't simply want to be a co-signer that could push my DTI beyond any lender limits.

If a trust was setup, can trustees take HEL or HELOC as a trustee? I'm just thinking out loud right now.

Mike Nuss · Answer

Hi @Tyler Cope Oregon isn't like Cali (as I understand it) when it comes to assessments. Sales and transfers of title do not trigger reassessment. Land use and building permit procedures are what trigger reassessments here, so you don't have to worry about that.

The only way to know for sure if adding a joint tenancy owner would violate a due on sale clause is to see the lending documents first hand. If it's a conventional bank, it's a high probability that is a violation. However, if your plan were to refi that wouldn't matter anyway. I"m no mortgage broker so no help for you there, but it's definitely something you could look into.

There are multiple ways to potentially accomplish what you would like to do here. Thinking about tax implications is very smart as it's easy to accidentally create a tax consequence if not done correctly. Brainstorming with your CPA helps a ton with scenarios look this. If you need a local CPA, I'm happy to refer you to an excellent one locally.

As for creative ideas, there really isn't enough info to go off of. There's equity, so it can be accomplished, it's just a matter of what does that look like.

You may want to look into a life estate and see if that applies to your situation.

Good luck.

Can this be done in Oregon?

Can this be done in Oregon?

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