Two Families on One Deed?

[Jim Smith]

Hello all...new to the board, and hoping for some help.

My wife, two sons and I all live in a townhome in Maryland. We are starting to burst at the seams and would like to move to more property. My sister-in-law owns an older house with a great amount of acerage which would provide a wonderful place for my boys to grow up and play at. She currently holds roughly 70% equity in the property.

My sister-in-law, my wife, and I have all talked about it and would like to explore moving into her house with her and building on an addition for my family. We had initially explored subdividing her lot and building our own home but some zoning laws in our county will not allow subdivision. So, we are thinking of moving in with her, adding our names to the title, and then taking out a loan to build the addition that our family would need.

Now, ignoring the fact that people likely think I'm crazy to move in with a sister-in-law, I was hoping someone could shed a little light on the tax implications and other relevant issues involved with this.

questions i have:

- can this be done...i.e, is it legal?
- any tax implications at time of title addition or anytime thereafter?
- what kind of loan could we get?
- is there anything we aren't thinking of?

Any help is very much appreciated!