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Before I get into what I want to achieve here are some facts about a rental property my grandfather owns that he would like to put in my name...with some stipulations of course.

Property Location: Texas
Appraisal Value,1999: 83,500
Remaining Mortgage: 53,000
Cost per 1040: 68,877
Accumulated Depreciation: 24,468

I must payoff the mortgage and pay any closing costs or capital gains/gift taxes my grandfather may incur. I have been going in circles with a gift/purchase of this home but the capital gains taxes and closing costs will leave me without cash to even paint the house. Keep in mind it has been a rental for over twenty needs tons of cosmetic work.

I have a new idea and it seems to be exactly what I want, but I know it has to be too good to be true (I'm a pessimist).

Step 1 Add myself to grandfather's title, insurance and loan
Step 2 Get insurance in my name
Step 3 Get a first lien home equity loan in my name (Bank One)
Step 4 Quit Claim Deed

What tax implications am I missing. Is this a gift? If I keep the title in both of our names will I be able to sell in two years without paying capital gains? Please Help:)

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