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My parents have their primary home they bought 20 years ago for $300K and still have a mortgage of $300K (I know..)- market value is around $500K. They want to give us the house - or to my kids (young kids). How can we get this done with minimal tax implications? we would not live there as a primary residence (though we would live there for a year) - we plan to rent it out afterwards. We'd appreciate some advice! We will talk to a real estate attorney but I wanted to do research beforehand to see if this would work somehow.
My parents have their primary home they bought 20 years ago for $300K and still have a mortgage of $300K (I know..)- market value is around $500K. They want to give us the house - or to my kids (young kids). How can we get this done with minimal tax implications? we would not live there as a primary residence (though we would live there for a year) - we plan to rent it out afterwards. We'd appreciate some advice! We will talk to a real estate attorney but I wanted to do research beforehand to see if this would work somehow.
Hopefully, you are talking about something (A) left in their will, as opposed to trying to (B) give you the house while they are still living.
You just ain't gonna believe what option (B) would cost you..........
White Elephant: A possession which its owner cannot dispose of and whose cost, particularly that of maintenance, is out of proportion to its usefulness.
Hopefully, you are talking about something (A) left in their will, as opposed to trying to (B) give you the house while they are still living.
You just ain't gonna believe what option (B) would cost you..........
White Elephant: A possession which its owner cannot dispose of and whose cost, particularly that of maintenance, is out of proportion to its usefulness.
A couple of concerns
What's mom and dad's financial situation? I assume that in giving you the house they are giving you the debt... are you ready for that?
I'm glad someone said something about the maintenance costs of the property. Is the property going to be easy to lease out? Are there any major repairs or updates needed in order to make it desirable to renters? Are you going to hire a property manager? Usually that is about 10%. If you still owe $300k on the house how much will you need to charge in rent? And remember, a house that is at least 20 years old is only going to need more and more care.. roof, water heater, appliances, furnace, etc. Interest rate on the loan will be important to note, but I can just see this arrangement being very expensive to maintain.
My parents have their primary home they bought 20 years ago for $300K and still have a mortgage of $300K (I know..)- market value is around $500K. They want to give us the house - or to my kids (young kids). How can we get this done with minimal tax implications? we would not live there as a primary residence (though we would live there for a year) - we plan to rent it out afterwards. We'd appreciate some advice! We will talk to a real estate attorney but I wanted to do research beforehand to see if this would work somehow.
No where do I see that you even WANT the house....
Your location is Vienna... Austria? West Virginia? other? European tax laws will differ from those of the USA.
No where do I see that you even WANT the house....
Reminds me of the time when my future mother-in-law was going to give us one of her rental properties as a starter home (it had been her starter home about 30 years earlier). She didn't owe a dime on the place, but it was in a not-so-nice area of town and in terrible condition... graffiti in the garage, rotted floor in the bathroom, leaded paint, etc... At first I was excited about the $45k valued property, but when I realized what we were really getting into I totally freaked out.... my fiance was an extremely handy guy and was going to do everything himself.. but it started to consume all our weekends. ... I'm sure after $10k worth of parts and God knows how many hours of labor we could have gotten that place in decent condition.... I don't know because we broke up...
But my point is that after a few weeks of work and consideration I realized that she what she was "gifting" us was a burden, not an asset.
I'm pretty sure their cap gains are tax free and there is no gift tax due from your parents if they file to apply the gift vs their lifetime cap
Ok- thanks, this is helpful. Yes, their cap gains is tax free after 20 years.
Re. the place- they left the area recently and are living in another property. They don't want to deal with the selling and want to gift it early. the place is in a good location and in good condition - a few upgrades but we know the house extremely well and are not concerned. We would rent it out and have already calculated we'd make money if it was the same mortgage amount of $300K. The house next to ours has been rented almost the entire 20 years - renting out will not be hard at all given location and short commute. We live 5 minutes from their house so we would not use a rental mgt firm. We do want the house and can assume the mortgage for a while if it doesn't rent. My parents own the other property they moved into.
A gift of a $500k home is a boost of your income of $500k, and the resulting taxes. Have them put it into a trust for you to inherit it when they die to avoid taxes.. You can still take over ownership and taxes ans maintenance, just that they would officially own it until they pass on..
Go see your tax man...
A gift of a $500k home is a boost of your income of $500k, and the resulting taxes. Have them put it into a trust for you to inherit it when they die to avoid taxes.. You can still take over ownership and taxes ans maintenance, just that they would officially own it until they pass on..
Go see your tax man...
You are completely incorrect, please refrain from giving advice on this topic
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