How can I legally and efficiently help my girlfriend build equity by helping with a mortgage?
"Have her chip in for the regular expenses, utilities, food, etc., and a bit for ""rent."" Then tell her to be sure to deposit to her retirement account, preferably a matched 401(k).  It's admirable to want her to build 'equity' but it's pretty convoluted. You can't actually give her ownership, and in the event you break up (I know you won't, but this is to help other readers) you'll have to pay her back a lump sum when she moves out. That might not be so easy." Equity means having ownership, and I think that's a REALLY bad idea in the scenario that you described.  If you stay together, there's really no upside to either of you in this scheme.  If you break-up then you'll have a terrible mess, especially if the break-up goes badly.  If she's really building equity, you're going to be faced with several hard questions: If this went bad at the end, it might be worse than a divorce in some sense since at least in the divorce you have established law to sort out the issues.  You'll be on your own here without a formal contract. (Marriage being a special case of a contract for our purposes here.) If she wants to share costs (which seems perfectly fair) then agree to rent and a split on utilities.  If you really insist on going down the path that you described, I think that you'll need some sort of contract, which probably involves a lawyer.  Anything short of that could not be considered having equity at all and will be completely unenforceable in the event of a bad break-up. (There is some notion of a verbal contract, but that's very hard to prove and subject to misunderstanding and misremembering.) Aside from all of these potential problems in event of a break-up, you would probably also be violating the terms of your mortgage, if you have one. From the bank's perspective, you are selling the property that is the collateral for that loan, which you're almost surely not allowed to do. There is no simple, legally reasonable, way for her to build equity by helping out with your mortgage, without her having a claim to your mortgage. The only 'equitable' thing she can do is rent from you.  If you want her to be building equity, have her start and fund a brokerage account for herself. If you have an affinity for real estate, have her buy REITs in said investment account. I agree with everyone who has simply told you 'Dont' and 'You can't' and add a few more considerations that you don't want to deal with: What you want to do is admirable but very complicated from a financial and legal perspective.  If this is really a route that you want to go down you should give up on the 'simple' and consider hiring a lawyer. "all the other answers are spot on, but look at it this way. really all you mean when you say ""building equity"" is ""accumulating wealth"".  if that is the goal, then having her invest the money in a brokerage (e.g. ira) account makes a lot more sense.  if you can't afford the apartment without her, then you can't afford to pay out her portion of the equity in the future.  which means she is not building equity, you are just borrowing money from her.  the safest and simplest thing for you to do is to agree on a number that does not include ""equity"". to be really safe, you might want to both sign something in writing that says she will never have an equity stake unless you agree to it in writing.  it doesn't have to be anything fancy. in fact, the shorter the better. i am thinking about 3 sentences should do the trick. if you feel you absolutely have to borrow money from her on a monthly basis to afford your mortgage, then i recommend you make it an unsecured loan.  just be sure to specify the interest rate (even if it is zero), and the repayment terms (and ideally, late payment penalties). again, nothing fancy, 10 sentences maybe.  e.g. ""john doe will borrow x$ per month, until jane doe vacates the apartment. after such time, john doe will begin repaying the loan at y$ per month...."" that said, borrowing money from friends and family almost never turns out well. at the very least, you need to save up a few months of rent so that if you do break up, you have time to find another roommate. disclaimer: i do not have any state-issued professional licenses." I'm glad that you feel like being fair and equitable to your party. Other answerers are, of course, correct that being fair and equitable to your girlfriend is not in your best interests but that's not what you're trying to do here and I commend you for it. There is nothing that stops you drawing up a simple legal contract giving your girlfriend a share of the value of your house in return for her payments. Just get it signed and witnessed and checked over by a legal representative. You can include reasonable terms for the money to be paid back if you separate - perhaps when you sell the property or within two years of the breakup - that don't put you in immediate danger of losing the property. Just make clear that this contract is between you and her for a sum of money linked to the value of your house; it does not establish any legal claim on your house itself. A reasonable level for her to claim the property would be one half of the change in equity between when you start joint paying and when you separate - should that happen. Have her pay something like a friendly monthly rent. This should be less than half of the monthly mortgage cost, since you are assuming the risk (and benefits) of a mortgage and closer to the rent of similar places near you. For when you get married and she is to have half the apartment, have a pre-agreed way to calculate a lump-sum that she needs to provide to match your own contributions up to that time, as if you two had equal contributions from the beginning. The financially precise way to do it would be to have her pay more than the mere sum of the amount (since she will be providing the amount at a later time than you), but I would be generous and skip this in your place if the difference is not too big. If you break up, she will have payed what would be a fair amount of rent, as if you two were renting, so, in this sense, it is fair that she would not have a claim on the apartment. In case that you two would like that she keeps the apartment, you can just sell it to her, having her pay this same amount as above and assume responsibility for the rest of the mortgage. There is no issue - and no question - if you get married.  The question is only relevant in the event that you go separate ways.  Should that happen, you imply that you would want to refund whatever amount your girlfriend has paid toward the mortgage. The solution, then, would seem to be to exempt her from any payments, as you will either give that money back to her (if you break up) or make her a co-owner of the condo (if you get married).  If you actually need her contributions to the monthly nut, you could give her a written agreement whereby you would refund her money (plus interest) at her discretion. "A 30-yr mortgage IS a committment. So, you are willing to commit to a place, but not your long-term girlfriend??? Either you don't do this ""cheap"" scheme idea, or you set up as a business arrangement, or you get married. This is quite a laissez-faire statement you make... ""Maybe we will eventually get married, maybe we will eventually break up, who knows."" Anything or anyone that is a ""who knows"" is not what you make a 30-yr committment on. I mean, unless you just want to risk throwing your money away. Now, man up, hire the lawyer to do official paperwork or else get a legal certificate of civil union or marriage or whatever you want to call it. If you try to do your cockamamie scheme ""on the cheap"" now, it will most surely cost you dearly in the future! Mixing money (particulary huge sums of 200,000 $!) when there is no legal obligation like marriage or a business contract, is a fool's errand! Now, grow up and do it the right way if you want to help her - and yourself too." "I just wanted to give you a different perspective, as I own a house (purchased with a mortgage), with my girlfriend. I think it can be done safely and fairly, but you do need to involve legal help to do it right. There really is nothing to be terrified about, the extra cost to set this up was almost irrelevant in the bigger picture of legal costs around purchasing and the documents describing the ownership scheme are quite straightforward. Maybe it's a UK thing, but it seems rather commonplace here.  We've chosen to hold this as ""tenants in common"" and use a trust deed for this when we purchased. We had a solicitor write the trust deed and it clearly states what percentage of the house is owned by either party and exactly what the steps would be taken, should we decide to end the trust (e.g. in case of a split-up). This includes things like the right to buy out the other person before selling on the market etc.  We also had to make wills separately to indicate what should happen with our percentage of the property in case one of us died as with this type of ownership it doesn't automatically go to the other person.  Finally we're both on the mortgage, which I guess is the main difference versus your situation. But again, you could get legal advice as to how this should best be handled." "This is fine, just have a plan before you go into it. Look up a co-ownership agreement contract off LegalZoom, they are like $15, or get a lawyer if you want. Decide if you want to be ""Joint tenants"" or ""Tenants in common"". You probably want to be joint tenants so that if one of you dies the property goes to the other person. Go through the agreement, make any changes you want, and then both sign it. These documents outline what happens if someone dies, or if you break up, or if you are allowed to sell your ownership, and anything else. Keep a record of who has paid what % of equity towards the house. Also look into tax laws, if the mortgage or house is only truly in 1 person's name they may get a tax break that the other person will not get. The co-ownership agreement is essentially the same agreement that happens when you're married, the only difference is that it happens automatically and implicitly when you're married. It's interesting that some people are saying this is a horrible idea when it's practically the same as the agreement you'd have if you were married. Whether you're single or married, if you own a house with another person and you break up, it's going to be a bit complicated. Get a contract in place beforehand so that things go as smoothly as possible. If you are both rational adults you shouldn't have any problems." I'm looking for something simple, legal, reasonably formal, easy to setup and tax efficient. You just described marriage. Get married.
They might be concerned with having to charge sales tax in California if they have a single employee in California, creating a nexus situation with CA. If that's the case, or even if there is some other issue, you might be able to switch from being a W2 employee to being a 1099 independent contractor. There's a host of additional issues this could cause, but it alleviate the nexus problem (if THAT is the problem). Here's a terrible solution you can bring up, but shouldn't do under any circumstances: offer to set up a mailing address in an allowed State, and give your company plausible deniability with regards to your legal residence. Obviously, this is a terrible idea, but exploring that option with your employer would help you suss out what the actual objection is. Ultimately, anything said here about the reason is just conjecture. You need to talk to the decision maker(s) about the real reason behind the denial. Then you can talk through solutions. Also - don't forget that you can get another job. If you are serious about a future with your girlfriend, you should put that relationship ahead of your current employment comfort and security. If you are willing to walk away from your position, you are in a much better situation to negotiate. "It will be helpful to establish some definitions: Long ""Long"" is financial slang for ""to have possession of an asset"", legally, and ""to debit an asset"", financially.   Short ""Short"" is financial slang for ""to be liable for an asset"", legally, and ""to credit an asset"", financially. Option ""Option"" is financial slang for ""to have the right but not obligation to force the liable to perform action"", legally.  Without limits and when taken to absurdity, this can mean slavery.  For equities, this means ""to have the right but not the obligation to force the liable to buy/sell a specified asset at a specified price with a specified expiration for that right"" for a call/put, respectively. By the above, a call option is ""the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right"". By the definition of ""long"" above, a call option is actually not long the underlying. By the definitions above and with a narrower scope applied to equities & indexes, to be ""long"" the call means ""to have the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right"" while to be ""short"" the call means ""to have the obligation to be forced to sell a specified asset at a specified price with a specified expiration for that right"". So, to be ""long"" a call means to simply own the call." It would be good to know which country you are in? You are basically on the right track with your last point. Usually when you buy your first property you need to come up with a deposit and then borrow the remainder to have enough to purchase the property. In most cases (and most places) the standard percentage of loan to deposit is 80% to 20%. This is expressed as the Loan to Value Ratio (LVR) which in this case would be 80%. (This being the amount of the loan to the value of the property). Some banks and lenders will lend you more than the 80% but this can usually come with extra costs (in Australia the banks charge an extra percentage when you borrow called Loan Mortgage Insurance (LMI) if you borrow over 80% and the LMI gets more expensive the higher LVR you borrow). Also this practice of lending more than 80% LVR has been tightened up since the GFC. So if you are borrowing 80% of the value of the property you will need to come up with the remainder 20% deposit plus the additional closing costs (taxes - in Australia we have to pay Stamp Duty, solicitor or conveyancing fees, loan application fees, building and pest inspection costs, etc.). If you then want to buy a second property you will need to come up with the same deposit and other closing costs again. Most people cannot afford to do this any time soon, especially since the a good majority of the money they used to save before is now going to pay the mortgage and upkeep of your first property (especially if you used to say live with your parents and now live in the property and not rent it out). So what a lot of people do who want to buy more properties is wait until the LVR of the property has dropped to say below 60%. This is achieved by the value of the property going up in value and the mortgage principle being reduced by your mortgage payments. Once you have enough, as you say, collateral or equity in the first property, then you can refinance your mortgage and use this equity in your existing property and the value of the new property you want to buy to basically borrow 100% of the value of the new property plus closing costs. As long as the LVR of the total borrowings versus the value of both properties remains at or below 80% this should be achievable. You can do this in two ways. Firstly you could refinance your first mortgage and borrow up to 80% LVR again and use this additional funds as your deposit and closing costs for the second property, for which you would then get a second mortgage. The second way is to refinance one mortgage over the two properties. The first method is preferred as your mortgages and properties are separated so if something does go wrong you don't have to sell everything up all at once. This process can be quite slow at the start, as you might have to wait a few years to build up equity in one property (especially if you live in it). But as you accumulate more and more properties it becomes easier and quicker to do as your equity will increase quicker with tenants paying a good portion of your costs if not all (if you are positively geared). Of course you do want to be careful if property prices fall (as this may drastically reduce your equity and increase your total LVR or the LVR on individual properties) and have a safety net. For example, I try to keep my LVR to 60% or below, currently they are below 50%. "As @BrenBarn points out, when people say ""they like having a mortgage because they get the benefit of writing off the interest"" they typically mean as opposed to renting. You can deduct interest and real estate (property) tax payments, as well as some closing costs in the year you purchase the home. You are also building equity (instead of helping your landlord build his or her equity).  Take for example a single person paying $1,000/month to rent an apartment. This is not deductible. He has $1,800 a year in other expenditures that would otherwise be deductible (charitable contributions, etc.), but he doesn't itemize because it isn't more than the $6,100 standard deduction, so it doesn't matter.  He takes out a mortgage for $150,000 at 6% over a 30-year term to buy a similarly-appointed home. His new mortgage payment is about $900/month, plus he puts $100/month into an escrow account for property taxes, roughly totaling his former rent payment. Over the first full year, he pays about $9,000 in deductible mortgage interest and $1,200 in deductible real estate taxes. And because he is now itemizing, he can also write off the aforementioned $1,800. At a top marginal tax rate of 25%, he shaved nearly $1,500 (.25 * (9000 + 1200 + 1800 - 6100)) off his federal income tax bill -- with the same living expenses! This is a simple example with some arbitrary numbers to prove the point, and there are a lot of other pros and cons to buying vs. renting. But again, this is probably what they mean when you hear this. Others have covered the overpaying angle, and there are a bunch of other Money.SE posts on the same or similar subjects." "I think your question is pretty wise, and the comments indicate that you understand the magnitude of the situation.   First off, there could be nothing that your friend could do.  Step parent relationships can be strained and this could make it worse, add the age of the girl and grief and he could make this a lot worse then it potentially is.  She may spend it all to spite step-dad. Secondly, there is a need to understand by all involved that personal finance is about 75-90% behavior.  Very high income people can wind up bankrupt, and lower income people can end up wealthy.  The difference between two people's success or failure often boils down to behavior.   Thirdly, I think you understand that there needs to be a ""why"", not only a ""what"" to do.  I think that is the real tricky part.  There has to be a teaching component along with an okay this is what you should do.   Finding a person will be difficult.  First off there is not a lot of money involved.  Good financial advisers handle much larger cash positions and this young lady will probably need to spend some of it down.  Secondly most FAs are willing to provide a cookie cutter solution to the problem at hand.  This will likely leave a bad taste in the daughter's mouth.   If it was me, I would encourage two things: Both of those things buy time.  If she comes out of this with an education in a career field with a 50-60K starting salary, a nice used car, and no student loans that would be okay.  I would venture to say mom would be happy.   If she is very savvy, she might be able to come out of this with a down payment on a place of her own; or, if she has education all locked up perhaps purchasing a home for mostly cash.   In the interim period a search for a good teaching FA could occur.  Finding such a person could also help you and your friend in addition to the daughter.  Now my own step-daughter and I have a good financial relationship.  There are other areas where our relationship can be strained but as far as finances we relate well.  We took Financial Peace University  ($100 offered through many local churches) together when she was at the tender age of 16.  The story of ""Ben and Arthur"" really spoke to her and we have had many subsequent conversations on the matter.  That may work in this case. A youTube video on part of the lesson." The issue here is that the transaction (your funds to her account) looks very similar to the rent payments which you plan to make in the future. Those rental payments (if deemed to be commercial) would normally be subject to tax. Consider the scenario where rather than an up front $5000, and $5000 over 2 years, you paid her $10000, and paid no rent. That might be an attempt to avoid paying tax. A commercial transaction can't be re-labeled as a gift just based on your election - the transaction needs to be considered as a whole. However, an interest free, unsecured loan connected with you paying rent at market rate would be (depending on local laws) simply foolish (to some extent). I don't think you are able to structure the transaction as a joint purchase (since the mortgage will prevent her from allocating a part of the property to you). Its also likely that you can live in her house and contribute an adequate amount to the household costs without creating a taxable income for her. For example in the UK, up to ~£4000 pa rental income generated from the property in which you reside does not need to be declared. You need to identify the scenarios where your particular arrangement could be imagined as resulting in a taxable or potentially taxable event - then make sure you are not avoiding those events just by choosing how you label the events. I would contribute this money to the deposit, but wouldn’t pay anything else-more, and want to know if they do the house up, and it increases in value how does my share gets worked out if I want it out in about l0 years? This can be simple; You have contributed 9K out of 260 K. You own Approx. 3.4% of equity in the house. Whenever this gets sold, you will get back 3.4%. Now the real trick comes in, if the house is not being sold, ie your Sister would continue using it, and you want out, then one would need to decide the fair market value. You could agree to consult some lists or agree of the fair value based on sale price of similar properties in the area. This is where it normally gets difficult and can cause disputes. we do not have much money for solicitors / lawyers, and we don't really really need them It is advisable to get a lawyer as one doesn't know what happens 10 years in future, things may go wrong between you and your sister, or your sister is no more and her fiancé  may not honor the agreement you have. There are other considerations;   It would be advisable you have your name on the property. It would help from Tax point of view in future. If you are not having your name on the property, then the money you are giving would be loan or gift and needs to have the right paper work If its a gift you can't have it back. Your sister would have to make a gift back to you later whenever you want out. So it can really be complicated and it would be worth the money you spend on lawyer "Also the will stipulated that the house cannot be sold as long as one of my wife's aunts (not the same one who supposedly took the file cabinet) is alive. This is a turkey of a provision, particularly if she is not living in the house.  It essentially renders the house, which is mortgaged, valueless.  You'd have to put money into it to maintain the mortgage until she dies and you can sell it.   The way that I see it, you have four options: Crack that provision in the will.  You'd need to hire a lawyer for that.  It may not be possible.   Abandon the house.  It's currently owned by the estate, so leave it in the estate.  Distribute any goods and investments, but let the bank foreclose on the house.  You don't get any value from the house, but you don't lose anything either.  Your father's credit rating will take a posthumous hit that it can afford.  You may need to talk to a lawyer here as well, but this is going to be a standard problem.   Explore a reverse mortgage.  They may be able to accommodate the weird provision with the aunt and manage the property while giving a payout.  Or maybe not.  It doesn't hurt to ask.   Find a property manager in Philadelphia and have them rent out the house for you.  Google gave some results on ""find property management company Philadelphia"" and you might be able to do better while in Philadelphia to get rid of his stuff.  Again, I'd leave the house on the estate, as you are blocked from selling.  A lawyer might need to put it in a trust or something to make that work (if the estate has to be closed in a certain time period).  Pay the mortgage out of the rent.  If there's extra left over, you can either pay down the mortgage faster or distribute it.   Note that the rent may not support the mortgage.  If not, then option four is not practical.  However, in that case, the house is unlikely to be worth much net of the mortgage anyway.  Let the bank have it (option two).   If the aunt needs to move into the house, then you can give up the rental income.  She can either pay the mortgage (possibly by renting rooms) or allow foreclosure.  A reverse mortgage might also help in that situation.   It's worth noting that three of the options involve a lawyer.  Consulting one to help choose among the options might be constructive.  You may be able to find a law firm with offices in both Florida and Pennsylvania.   It's currently winter.  Someone should check on the house to make sure that the heat is running and the pipes aren't freezing.  If you can't do anything with it now, consider winterizing by turning off the water and draining the pipes.  Turn the heat down to something reasonable and unplug the refrigerator (throw out the food first).  Note that the kind of heat matters.  You may need to buy oil or pay a gas bill in addition to electricity."