SELL % TO KEEP HOUSE

[Jonathan Spinner]

Hi BP Forum!

Can I  sell a % of my house so that I can keep it? And if so, HOW? Also, will cap gains tax exemption be affected if i do?

FACTS:

Purchased house in 2015 for $405K (FHA Loan, 4% down, + PMI).

I was laid off during the Pandemic, and have not been able to land a quality job since. 

Because I was laid off, I have fallen behind on bills, credit cards, etc. so much so that i cannot afford to keep living in my home. Credit score has plummeted.

My home was recently valued at  $900K according to a real estate agent with 30 years experience. 

My mortgage balance is $375K, so $525K profit if i sell.

MY STORY: 

My friend lives with me and we both do not want to move. After learning about my financial situation, and that I would need to sell my house, my friend offered to go in on a house with me after i sold my current house. He is willing to put up about $400K, and I would put up about $400k from the proceeds of my home sale and we would buy a new house together cash for around $800K.

I was ecstatic about this idea  and planned to do it,  but recently I have thought of another possibility...

What if i just sold a % of my property to him? 

 If i did this, we wouldn't have to move, i could pay off all my bills, be debt free (except the mortgage) and save a ton on selling costs. I understand there will be questions regarding the future,,, if one wants to sell and the other doesnt etc. and all i can say is we have figured out an agreeable solution and the future is not an issue. We have gone over all the possible scenarios and have agreed to each possible situation, so the future is not a concern. The only concern we have is right now, keeping the house.

Questions:

Is this possible?

Do lenders allow it? 

If so, what are the tax implications for him?  Is the capital gains tax exemption affected if I add my friend to the title (Tennants in common)? Would we have to live in the house another 2 years before we would qualify for cap gains tax exemption again?

I tried to keep it concise, and THANK YOU to anyone who reads this!!

-J