Purchasing a home through contract from a family member

[Dan C.]

Hello - 

I'm in the process of purchasing my first Single Family Investment property and I have a few questions as to how to go through with the purchase -- My Father has offered to be the bank as I don't have 25% down for an investment property -- but we believe this property is a solid deal and I would like to capitalize on that.

Background:

• My father has offered to pay 100% of the home in a cash offer to assist in getting a better deal, 
• I would be responsible for paying ~25% of the loan back inclusive of interest, within 12 months (essentially, the entire first year would be spent building equity and repaying the loan)
• At which point in time, I will be responsible for going to the bank and getting a 75% LTV mortgage for the remainder of what is owed to repay him his capital.
• The purchase price is low enough on the house that there should be no concern regarding depreciation or 12 months time being enough to pay back enough for a 75% LTV to be possible.
• When the offer is agreed upon, whatever the purchase price may be, would be the exact same price as what the contract would be. Therefore, there is no "gifting" of equity, or trying to screw Uncle Sam.

Essentially, as I do not have enough capital for 25% down, and I will not be living in this property - I'm curious as to how this will look to the IRS. 

Questions:

• Can we legally put the house in my name? (I know in working with lenders in the past, any money in excess of $15,000 is considered a "gift" and needs to be taxed appropriately).
  • Further, those funds typically have to sit in my account for ~60 days. -- but we aren't using a lender here.
• Should my father put the house in his name and we transfer ownership at the end of the 1 year agreement?
  • What happens when he "sells" the property (aka title transfer) to me at the end of the 12 months? 
  • Would he incur any taxes?

Any help / understanding is greatly appreciated!

Thanks,

Dan