I currently own a property with my mother in California. She was trying to help me get started when I first graduated by helping with the down payment. Both of our names are on the title, but my name is solely on the mortgage and all the bills. She put down approximately 50% of the value of the property at the time of purchase as a down payment, and we both agree that we each own 50% of the property. She plans on leaving this property to me when she passes and her other home to my sibling.
At the start of this year we decided to rent out the property using a property manager. My mom wants me to take all the rental income as I pay all the bills and taxes. The property manager however, insists on splitting the payments 50/50. Half to my mom, and half to me. My first question is, is my mom required to take half the rental income or can it all be paid out to me? My mom doesnt want any involvement in the property and wants me to pay all the taxes and bills. Her intention was basically to just help me with a down payment on my first property.
The property manager suggested we do a quit claim deed. I am not sure if this is the route to go, but basically I would like to take on all the responsibilities of renting out the property and taking all the income and paying all the bills, but still have my mom on the title. I dont understand why the property manager cannot just make out all the rental income to me in my name or why they are deciding how to split our money. My mom has also told them as well that she wants all the rental income to go to me. If anyone could please explain how a quit claim deed works and if it would help us to achieve what we are trying to do it would be greatly appreciated.
Further complicating things is the fact that my mother lives in a different state. So they are withholding a certain amount of money each month to pay to the franchise tax board. They insist that because my mother's name is on the title, that we must pay this tax even though I am a California resident and I pay all the bills. Is it true that I need to pay this tax when I am a California resident?
Co own property with mom that we rent out using a property manager, questions about rental income and quit claim deeds
byu/ryanryans425 inrealestateinvesting
Posted by ryanryans425
1 Comment
The property manager is being weirdly rigid about this – if your mom explicitly wants all income to go to you and you’re handling all expenses, they should be able to accommodate that arrangement. A quit claim deed would transfer her ownership interest to you completely, which might not be what you want since she’s planning to leave it to you anyway and you’d lose any potential tax benefits of the inheritance step-up in basis
For the state tax withholding, yeah that’s probably legit since your mom is an out-of-state owner on the title, but you might want to talk to a tax pro about whether there’s a way around it given your specific arrangement