Parents are California residents. Their son got admission into a college in TEXAS. Kid doesn’t have any income and dependent on parents and around 18 years of age.
To take advantage resident tuition in 2018 parents bought a home in Texas for 185k using home line of credit with dependent kid and family trust as owners. Parents have primary residence with Mortgage taken prior to 1/1/2017.
1) This means a gift tax return is need for 2018 as amount of 92.5k as this is treated as gift to child.
2) The property is treated as second home for parents. Subject to 750k limit they can take mortgage deduction on second home. As the mortgage is paid by parents they can take deduction of full amount.
The college has told that to get resident tuition the property should be completely on the kids name so now they want to transfer the property fully to the kid that means
3) Gift tax return is need for 2019 as amount of 92.5k as this is treated as gift to child.
4) if child is living in the house this still a second home and parents can take deduction of full amount
Did i get it right or Am I missing something here?