I want an investment partner to buy into my current residence. What is the best way to do this?

My home (located in Salem, OR area) would be valued at $225,000 with $65,000 of equity in the property. I have two loans 1st $135,000 @ 5.25%, 2nd $25,000 @ 7.00%. My first idea would be to have him pay me 50% of the built up equity and then we rent out the property either to myself or to another tennant.

My main concerns are with the tax implications of me, taking $32,500. Also concerned with the how to deal with the write-off on personal income taxes as far as mortgage interest and property taxes are concerned. (We have considered forming an LLC instead)

My first idea was to have him invest enough so that we could pay off the second mortgage. We then put his name on the title and the 1st mortgage (don't know if this can be done without a refinance) and then I rent the property for fair market value (this way we have a good tennant and I was planning on moving closer to my work when home prices stabilize.)

This is a random subject, I hope someone has some knowledge.

So many ways to do this. Here's just a few:
1. Equity share contract where he comes onto title with you based on some type of agreement.
2. Transfer the home into a trust where you are the residential beneficiary.
3. Wrap around mortgage, aka "All inclusive trust deed"

Regards...

Well, let's see. First off, you'll need to have an appraisal done, seeing as how property values are dropping in some areas and rising in others.

Next, if I was to get $32500 in cash, I'd pay off the $25000 loan on it. But you don't have to.

Taking $32,500 out of the home, you'd want to talk to a CPA before you did it. You shouldn't get taxed until you sell the property, but I'm not sure.

Are you jsut out of cash? If so, how is this going to help your financial situation? If you just rent it back, you're going to have to pay at least as much as the mortgage in order to rent it, otherwise you're taking money out of your pocket to pay off the excess mortgage.

I guess, lastly, why would someone come up with $32,500 to buy into your home? Not like they're getting a deal, just a place to park cash with no timeline to get it back. I wouldn't do it.

If I were you, I'd just sell it. It's a buyer's market out there, sell this and move closer to your work. You're creating headaches here.