I've come across this client that wants to help his parents buy a home near him and to help out he is interested in co-sign the loan, and when his parents move on or pass on he inherits the house and turns it into a rental property. The son will treat it like a rental to his parents, meaning, the son will be responsible for the mortgage and upkeep, and the parents will pay him a little rent. There's many issues at play here. Son wants to get owner occupied loan rates so that means the dad needs to be on the loan and title. Son wants to treat it, for tax purposes, like a rental so he will report income from parents and wants to deduct all the mortgage interest, even though the father is on the loan. I was told by another CPA that if the son wants to deduct all the mortgage interest, the dad cannot be on title, because the son would otherwise only be able to deduct half of expenses such as mortgage interest if dad is still on title. Can someone confirm this? We are hoping if son pays 100% of mortgage/housing, and reports all the rental income from dad, that son can deduct all rental expenses the same as if he was sole owner. Furthermore, I'm told that if son is the only one on title, I'm told he would lose any possibility of a step up upon his father's death, but if his dad was JTWROS on the property here in Colorado (a common law property state), that there would be a 50% step up (the father's half) when he died. I'm not sure if this is correct. I thought that it depends on who contributed money to purchase the home. So if dad contributed all the money to buy the home such as the down payment, that the house would receive a full step up at his death? Or am I confusing that rule with marriage in community property states? Anyways, the goal is for the house to end up in the son's name without probate and to be well managed from a tax standpoint, both for passive income tax purposes and inheritance purposes. (This is a small estate so no estate or gift tax concerns). If you have any suggestions, please share! We'll all learn together.