Will this help me fiancially or hurt me?
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Will this help me fiancially or hurt me?
A relative asked me to put some property land in my name. He is paying all taxes on the land. There is nothing built on it, it is just forest. He mentioned that I could use it as collateral if I ever need a loan for anything. Will this hurt me financially when I file my taxes at the end of the year? Please let me know ASAP.
Thanks
SG
Asked on September 15, 2016 under Real Estate Law, North Carolina
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
If the land is titled to you (put in your name), you become it's owner. If you are its owner, you are responsible for the taxes. If someone pays a debt or obligation for you (i.e. make a payment you are obligated to pay), that payment is treated the same as income to you (if you owe $10k, having someone pay it for you is the same mathematially and legally as if you received an extra $10k from work--you are $10k better off than you would otherwise have been). So you should have to pay income taxes on the "income" from the relative's tax payments on the land: if he pays $8 in taxes, say, that's like you getting an extra $8k in income, and will generally cost you (depending on your tax bracket) between $1,600 and maybe $2,700 or so in extra taxes.
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