Can You Buy A House For Someone Else?

Whether or not it is possible to buy a house for another person is not a question that everyone is going to face. However, if you are fortunate enough to be a position, where you’re able to buy another person property, there are a surprising number of ways to do it. Each of these ways has different financial, legal, and taxation implications for both the “house gifter” and the “house giftee.” Let me share what I found out when my sister considered buying a home for our parents.

Can you buy a house for someone else? Yes, you can buy a house for someone else, but it may not be the best option for you or the other person. If you want to provide a worry-free home for another, then there are choices that might be financially and legally more appropriate.

Buying A House  For Someone Else

There are a number of legitimate ways to buy a home for a parent, a child, another relative, or anyone else to whom you feel the need to be this generous. There are also ways to co-own a house, provide a home without gifting a house and even splitting the ownership of your existing home with another.

Let’s take a look at the main options, their pros and cons, and any tax implications of which you need to be aware.

A Cash Purchase And A Straight Gift

If you have the means to make a cash purchase and then gift the property to another person, then this is a relatively simple option. When you purchase the house have the deeds drawn up with the recipients’ name and “Hey Presto” they have a house.

Once the recipient has their name on the deed, they become legally responsible for the property, any associated property taxes, and any liabilities arising out of the property. They are also at liberty to do exactly what they like with the property, within the law and can renovate, demolish and rebuild or even sell the home and keep the proceeds. With their name on the deeds, you have no legal rights or control over the property.

For a parent securely earning around $70,000 salary and wishing to help their child onto the property ladder, they can choose a suitable home for them. By making a cash purchase and gifting the house, they can bypass the complexities of mortgages and provide their child with an asset. This scenario is perfect for children who do not wish their parents to have any financial part in an expensive wedding. It will be a memorable and heartwarming gift for anyone starting a new life.

From a tax perspective, if you purchase a house for someone else, you must submit IRS form 709 because it is a gift worth over $15,000, the limit for tax-free giving to individuals. However, unless the cost of the house brings your total lifetime gift giving to over $5.6 million, you will not owe any federal gift giving taxes.

The person receiving the house, however, does not have to report your generosity and it will not have any direct implications for their federal income tax.

A Second Mortgage

If you are considering taking out a second mortgage to buy a home for someone else then, you have two options. You can either take out a second home mortgage or an investment property mortgage.

A Second Home Mortgage

Lenders tend to worry more about a second home mortgage than they do about the mortgage for your primary residence. The reason for this is that they see you being attached and invested in your home, but, if things go wrong financially you are more likely to default on a mortgage for a second home. The fact that you plan to gift it to someone else doesn’t have an impact.

The perceived increase in risk for the lender also means that you have to have a very good credit score, a more substantial downpayment and will incur higher fees and interest charges on a mortgage for a second home.

You can still deduct the interest on your property loan for your second house as well as the property taxes when it comes to filing your taxes. However, as soon as you put the deed in the recipients’ name, then the tax break is theirs and not yours.

Also, many lenders will not provide a mortgage for a second home if the property is within 50 miles of your primary residence. The exception to this is the Family Opportunity Mortgage authorized by Fannie Mae and Freddie Mac. This is specifically designed for children buying their parents a home.

A second home mortgage leverages your existing home equity to finance the purchase. This option may require less immediate cash but has higher interest rates and additional financial responsibilities. Carefully assess your affordability, consult with financial professionals, and weigh the pros and cons to determine if a second home mortgage is the right path to help someone else achieve homeownership. Careful planning is critical to ensuring a smooth and successful gifting process.

An Investment Property Second Mortgage

If you opt for a second mortgage and class the house as an investment property, you will come up against the same issues in regards to higher interest rates, higher fees, and these days most lenders will ask for at least a 20% deposit.

Even if you share with the lender that you are planning to rent to your parents or children it may not make a lot of difference.

A Home Equity Loan

If you have enough cash for a decent deposit and only need a small loan to buy a house for someone else, then a home equity loan may be an option for you. Assuming you can comfortably afford the repayments, it can be relatively straightforward to be awarded these loans, especially if you have significant equity.

The drawback on this option is that the tax laws have changed recently, and you cannot deduct the interest for a home equity loan unless it is used directly to improve the property.

Gifting a house with a home equity loan lets you tap into your existing home’s value to pay for the new place. Unlike a second mortgage, you handle the whole loan, potentially benefiting from lower interest rates. While the recipient enjoys their new home, you maintain sole responsibility for the loan. Like any financial decision, consider the pros and cons carefully and consult with financial experts before embarking on this path.

Helping Someone Buy A Home

If you are not in the position to or do not want to straight up buy a home for someone else, there are also many ways to help someone else buy a property.

Gifting The Downpayment

In the same way that you can gift a house, you can gift the downpayment.


Be aware that even though this is a gift and not a loan that needs repaying, the lender may be suspicious that it is a friendly “off the books” loan and factor that debt into their calculations. This could result in the offer of a smaller mortgage for the buyer.

If you want to gift the downpayment and not cause potential problems for the recipients than give the money several months ahead of them beginning their house hunting. This way a sudden large deposit does not show up on the statements provided to the lender, and there is no question over whether it needs to be paid back.

Being A Co-Singer

If you do not qualify for a second mortgage, or just do not have the income to cover the full payment on another mortgage another option is to be what is known as a non-occupant co-signer on a home loan.

You will have the same benefits and responsibilities as you would for any other home loan but by co-signing both parties are accepting responsibility. The main advantage of this method is that you alone, or the home recipient alone, might not qualify for a mortgage but your combined assets and income may be enough.

The downside is that if anything goes wrong, you can find yourself 100% responsible for the entire mortgage. Also, the loan will show up on your credit report and affect your ability to borrow elsewhere, as well as your credit score.

Buying A House And Then Charging Rent

This, on the surface of it, seems like a good idea but there are potential tax complications if you purchase a home and rent it out, even to a family member.

If you rent the house to a friend or family member at a fair market rent, then you can claim all of the tax deductions that landlords are entitled to, but the rent will count as income.

If you charge a nominal rent, then the IRS will consider the house as a personal use asset, and you cannot claim landlord deductions.

Buying A House And Letting It Rent Free

If your parents are to live in the house rent-free, you may be able to claim them as dependents if you show they do not have enough income on which to live and you pay more than half of their support costs. The downside to this option is that there are then so many tax, legal, and financial complications, that you would need sound legal advice to ensure you do not run afoul of the law.

Providing The Finance As A Lender

Yet another alternative is to act as a lender and provide a loan for someone else to purchase a home.

This allows you to hand over the money, and not affect your gift-giving tax allocations. The biggest danger is that the other person could default on their loan and you end up with a messy financial and personal situation on your hands.

Gifting Cash For The Full Purchase

You could give someone a one-off gift of the total amount with which to buy a home. This, from a financial, legal, and tax perspective is much the same as buying the house yourself and gifting it.

Can I Transfer My House To Someone Else?

You can give your house, or any additional properties you own to anyone you wish, and there are three main ways of doing it.

Transfer The Deed

To transfer the deed you merely obtain the correct form from the recorder or register of deeds where you live and sign over the property. Once the form is complete and witnessed by a notary, file the form at the records office.

Pros Of Tranferring The Deed

  • Quick
  • Easy
  • Simple
  • Inexpensive

Cons Of Transferring The Deed

  • You give up all rights to the property as soon as you sign the deed over so you must be sure you want to do this and that you can trust the person to whom you are giving ownership.
  • The person to whom you gift the house will immediately become financially and legally responsible for the home.

Transfer On Death Deed

Some states have what is called a Transfer On Death Deed. This allows you to sign over the deed to your house, but it only becomes active when you die. This prevents any of the complications of passing ownership of your home to a family member or friend while you still live there.

Can you split ownership?

There is nothing to stop two people buying a property together. The split does not have to be fifty-fifty, it can be whatever percentages you both choose. This option is relatively easy if you are a cash buyer but can become complicated or even impossible if you both require third-party finance with which to purchase the property.

This can work well for some people but when decisions have to be made about upkeep, renovations or selling the property things can become complicated very quickly. This is especially true if you are buying with a family member who subsequently dies and either wills their portion of the home to someone else or, worse still, dies without a will at all.

Joint Tenancy Deeds

With this option, you can have a new deed prepared that lists both you and your relative as joint owners. The difference with this option is that there is a right of survivorship. This means that when one of you dies, the other person takes all interest in the property by operation of law.

In this case, when one of the owners dies the fair market value of their proportion of the home must be included in the estate for tax purpose.

Related Content

What does a real estate agent do to help you sell your home? A real estate agent will advise you about the best way to present your home, the most appropriate sale price for the current market, and how to negotiate the sales contract. Not only that, but they have access to an extensive network of buyers and the professionals involved in the home sale process, people who you would never have access to otherwise. Click the link to read about the 12 ways they can help.

Buying a home is a stressful and complex process. One which cannot be done without time and preparation. So, to give you a taster of what you can expect, here is a 14 step guide to buying a house.


This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.


Geoff Southworth is the creator of, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.

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