Cashout Refi on Relative's House to House Flip & Tax Ramification

[Stephen McCracken]

Hey Guys,

Just got off the phone with my CPA (out in California)... relocated to Denver a few months ago.

I recently refinanced a retired relative's home (I was named co-borrower hence now on Title as joint tenant)

My questions are

1. Because I did not "contribute" to the cost of the home, will I be taxed for the refi cash out as gift tax? (I pay their mortgage and taxes)

2. This relative is aware I will be reallocating the cash out amount to start a house flipping/investment business in Denver. What is the best way to purchase a project- S Corp? LLC? Sole proprietor?

3. Any recommendations on a RE accountant who can help me with these questions?

Thanks!

[Bill S.]

@Stephen McCracken I am a bit late to this party but I have a few thoughts. 

1) I am not a CPA or attorney so this is not legal and tax advise but that doesn't stop me from having an opinion or recommending you ask a tax professional theses questions.

2) Just because you are on the loan does not mean you are on title. Perhaps the lender required that you get on title. If you were added to title, then that is a gift for your share (50%). At one time, there are one time gift exceptions with dollar limits so you might still be in the clear there.

3) The loan proceeds are not taxed. You may or may not be able to deduct the interest payments. 

4) @Brandon Hall (I hope I got the right one) should be able to help you answer the questions.