Someone is buying me out of a mortgage, what kind of taxes should I expect?
About 9 years ago, I co-signed a loan for a mortgage with a family friend. I basically was just a co-signer, I didn't contribute to the down payment or any of the monthly mortgage payments.
Since then, my co-signer had passed away but his widow and kids still live in the house. Now, I want to take my name out of the deed of the house and the mortgage and completely give everything back to the widow and the kids. The widow and kids are offering to buy me out of the mortgage. It's just so that they can refinance the house and have everything under their names and remove me completely.
I'm totally OK with this and not seeking any monetary amount at all. However, if they buy me out, does that mean I'm technically "making money" from them and have to pay extra taxes for having sold a house?
Thank you!
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In the US, you'll have to report any profit on selling the house as income (capital gain). The house was not your residence, so gains on it are not excluded (part of gains on sale of primary residence is protected). If you have zero invested, and you're paid zero when you are removed from the mortgage, then there's no profit, no gain, and nothing to tax.
(If not in the US, I'll delete the answer.)
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