In the family rehab and transfer - path of least resistance?

[Jill Reid]

My father is looking to sell our family home in Baltimore, Maryland. The house is old (1919) and needs some work. He does not currently live there (no one does) and he is looking to be totally rid of the property. It is insured, paid off, and his is the only name on the deed.

I am looking to move back to that area in 2019 when I am out of the military and sell my current home. I see a great opportunity to get started in RE here. I have had the house inspected, and estimates done on all the work that needs to be completed, but there are some legal things to consider before I put any money into work being done on a house that I do not own.

I would love to rehab the house, rent it out, and then live in it when I move back. My dad has said he is looking to get $200K for it. There is not necessarily a rush on getting him that money (the house has been sitting for a bit, and he does want me to have this opportunity), however in 5 years he is obligated to pay $50K in divorce settlement. Once some fixes are done, I think it could go for at least $300K.

My question is about the best path forward to rehab and eventually buy this house from my dad with the least financial and legal impact on us both. I have looked into adding my name to the deed as joint tenants, or tenants in common but my biggest concern is that if anything were to go wrong (e.g. while renting it out), my dad’s name would still be on the deed and therefore still partially liable (I would like to assume full legal liability). I also don’t want him to incur a lot of gift tax by gifting it to me (I guess I could pay him back whatever tax he pays on it?) Also- I am assuming it would be better to gift the house before rehab is done, so it’s a lower market value? The more and more I look into this, the more tax implications there seem to be.

Any ideas or advice anyone can offer is very appreciated!