Co-Buying a Home in SF With a Partner, Parents or Friends

If a partner, your parents or a friend are what get you to a San Francisco price, settle four things before anyone wires money: how the money arrives, how title is held, what agreement governs the exit, and what it does to your property taxes years later. The costliest shortcut, a non-occupant parent on the deed, is the one families pick without thinking.

The four ways family money arrives

Gift. Fannie Mae accepts gifts from relatives and people with a family-type relationship for a primary residence. You need a signed gift letter (amount, relationship, no repayment expected) and proof of the transfer. The 2026 annual exclusion is $19,000 per donor per recipient, so two parents can give a child and the child's partner $76,000 with no filing; above that the donor files Form 709 against a $15 million lifetime exemption.

Loan. A real loan has a written note and interest at or above the IRS applicable federal rate; charge less and section 7872 imputes the shortfall as a gift to you and interest income to them. To deduct the interest, the loan must be secured by a recorded deed of trust. Calling a loan a gift on a gift letter is mortgage fraud.

Lender rules for co-borrowers

Fannie Mae permits a non-occupant borrower on a principal residence and lets automated underwriting blend that person's income and debts with yours; manual underwriting caps the occupant's own ratio. Ask each lender in writing:

• Which score governs. Fannie Mae dropped its fixed minimum for automated approvals in late 2025, but pricing still follows score, and many jumbo programs use the lowest borrower's median.
• Reserves and ratio. Agency loans often need no reserves on a one-unit primary and allow up to a 50% debt ratio with an automated approval; jumbo lenders typically want six to twelve months of payments and about 43%. Above the 2026 SF conforming limit of $1,249,125 each lender writes its own co-borrower rules.
• Whether everyone on the note must be on the deed. Many lenders close with a parent on the note and off title; some will not.

Unmarried partners: what the law does not do for you

Lenders qualify you the same whether or not you are married; California law does not. Community property, the reassessment exclusion for transfers between spouses or registered domestic partners, and inheritance without a will attach only to those relationships, and the unlimited federal marital deduction only to spouses. Unmarried partners own exactly what the deed says; anything beyond that is a contract claim you must prove; and a tenancy-in-common share held at death with no will or trust goes to that person's heirs, not you.

Without an agreement, a breakup means a buyout negotiated under stress, a sale, or a partition action: any co-owner can ask a court to order a sale, and since 2023 the Partition of Real Property Act gives the others a right to buy the departing share at appraised value first.

Holding title: joint tenancy vs tenants in common

California presumes tenants in common when the deed is silent. Community property with right of survivorship is for spouses and registered domestic partners only; spouses get a full federal basis step-up on both halves, but federal tax law does not treat registered domestic partners as spouses, so get tax advice first. Living trusts and vesting covers trusts. Legally every co-owned home is a tenancy in common; in San Francisco "TIC" means the multi-unit version, where each owner has a unit and a fractional loan and needs a TIC attorney and a fractional lender.

The co-ownership agreement

Sign it before closing. A real estate attorney drafts it for a flat fee that varies with the number of owners and units; get it in writing. It should cover:

• Contributions and ownership percentages, and whether they float with later payments
• The monthly split of principal, interest, taxes, insurance and dues, plus a repair reserve
• Improvements: who approves, who pays, what credit they earn at exit
• The buyout formula: one appraisal or the average of two, minus the loan; pull closed sales from the comps tool as a neutral starting point
• Right of first refusal, cure periods for missed payments, when the others can force a buyout or sale, and a waiver of partition
• Death, disability, a breakup, and a co-owner's divorce pulling a spouse's community property claim into your title

Taxes when more than one person owns the home

Each unmarried co-owner files alone. You deduct the interest and property tax you actually paid if you own and live in the home; the Form 1098 goes to one borrower and the other attaches a statement. A non-occupant parent on the note gets no deduction, because it is not their residence.

On sale, the $250,000 exclusion belongs to each owner who lived there two of the last five years, so two occupant co-owners shelter $500,000 between them; a non-occupant parent's share is a taxable gain.

Prop 13, Prop 19 and the parent-on-title trap

Nothing changes on day one; the bill comes when a share moves. California treats a transfer of an undivided interest as a change in ownership of that interest only: when your parents gift you their 30% or you buy it out, that 30% is reassessed to market value while your 70% keeps its factored base. The parent-child exclusion will not save you; since February 16, 2021 it covers only a parent's own principal residence that the child moves into and claims the homeowner exemption on within a year, capped at the parent's base plus about $1.04 million through February 15, 2027. A parent who never lived there has no family home to pass.

Numbers: buy at $1,500,000 with parents holding 30%. If the home is worth $2,200,000 eight years later, their share is reassessed from about $527,000 to $660,000, roughly $1,570 more a year at SF's FY2025-26 rate of about 1.18%, before direct charges (as of 2026-10-25, check current figures). A buyout for money also owes SF transfer tax on the consideration, $3.40 per $500 on prices between $250,000 and $1 million, about $4,500 on $660,000; the rate steps up above $1 million, a pure gift is generally exempt, and the Assessor-Recorder can confirm how partial interests are treated. A gift or a co-signature avoids all of this. Prop 13 and Prop 19 covers the share you keep.

Exits: refinancing, buyouts and selling

• Removing a co-borrower. A quitclaim deed removes someone from title, not from the loan; the usual exit is a rate-and-term refinance in the remaining owner's name. The refinance does not trigger reassessment; the deed moving the departing share does, unless an exclusion such as the interspousal one applies. Refinancing has the math.
• Buying out a co-owner. Run the formula, fund it with cash or a cash-out refinance, record a deed, and expect reassessment and transfer tax on the share unless an exclusion applies; the departing owner may owe tax on their gain.
• Selling. Proceeds split per the agreement's ledger, not just the deed.
• Keep everything. Closing statement, gift letters, the family note, every transfer and invoice: your basis, your buyout math and your partition defense.

What to shop for right now

• Real estate attorney for the co-ownership agreement (savings: medium). Get two or three flat quotes from firms that draft SF TIC and co-ownership agreements and compare what each includes; the saving is avoiding a partition action.
• Mortgage lender for a co-borrower or gift-fund file (savings: medium). Lenders differ on non-occupant co-borrowers, family seconds and gift documentation. State exactly how the money arrives at pre-approval, then compare same-day Loan Estimates as shopping lenders describes.