Buying a property with my daughter. Best financial arrangement?

[Anthony Pitruzzello]

I own a townhouse in Spokane. (Own=No Mortgage) My adult daughter wants to buy a home. I could help her get her own place. However, she would like for us (my daughter, myself and the grandkids) to live close together. We found a property that includes a house (for my daughter and the grandkids) and an apartment over a large garage/workshop in a separate building (for me). It occurred to me that rather than have my daughter and I each co-sign a mortgage, it might make more sense for me to buy the property and rent to my daughter. I would put the house in a trust with my daughter as executor. I would retain control during my lifetime, then the property would go to my daughter. Actually, even the rent she would pay would be essentially a forced saving that would eventually come back to her. I was wondering whether there might be any tax advantages or disadvantages to my owning the property as both a resident and a landlord. Also, I have undefined misgivings about two people co-signing a mortgage. I know nothing about real estate investment or property tax law. I’m just trying to figure out where to start in terms of figuring out what makes sense.

[Robert Rixer]

Definitely a question for a tax attorney/accountant, especially with the dollar amounts involved. Generally though, you can deduct interest on the mortgage up to a certain point. If you do it all above board, you would pay taxes on the rental income received and your daughter would be using post-tax dollars to pay rent which isn't the most efficient.