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Old 10-28-2018, 02:40 PM
 
1 posts, read 398 times
Reputation: 10

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Hello. My dilemma is whether or not to purchase the property with myself as the owner, or put the property in my parents name.

Relevant facts:

I will be paying in cash. Mortgage deductions are therefore not relevant

I give my parents 15k each per year via check. Therefore my annual gift tax threshold is already maxxed out.


Pro's of keeping the property in my name:

- Parents' estate simplicity. Because the property is mine, no paperwork is necessary RE the house when my parents die. This is not a huge deal because my parents' estate will be far too small to worry about any estate tax.

- Cost of home will not be considered a gift. Therefore, the cost of the home will not be added to my lifetime gift tax exclusion (This is a major concern of mine since nobody knows whether Trump's Gift Tax Lifetime Maximum number will hold in future administrations).

- Furniture, maintenance, etc. of the home can also be paid by me without incurring a gift tax.

Cons of keeping the property in my name:


- My personal umbrella liability insurance will increase by a few hundred dollars per year.

- Because the home will not be the owners (me) primary residence, the home will not be eligible for Florida's 25k (value) property tax exclusion. Property tax will therefore increase by several hundred dollars per year.

- If I ever get divorced (not married at present), the home will be my asset and therefore in play during divorce proceedings.

What would you do?

Please let me know if I am missing any relevant considerations. Thank you.
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Old 10-28-2018, 02:52 PM
 
Location: AZ
672 posts, read 394,660 times
Reputation: 2776
1. Don’t get married.

2. Keep control of property. You did not mention any details about your parents. Age? Health? Elderly are subject to scams of all sorts. You can leave them the property in your own will assuming you consider you could easily die before them.

3. Parents and children can fall out. Happens all the time.

4. One of your parents could die and the survivor remarries. The house you bought could go to the new spouse if you do not own it.

5. If your parents are that needy, you might get then legally declared as your dependents if that is even possible. See CPA.
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Old 10-28-2018, 03:17 PM
 
18,857 posts, read 13,607,134 times
Reputation: 14276
Why don’t your parents purchase it and then leave it to you? Why are you giving them 30k a year and they need a second home? Seems like a troll first post
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Old 10-28-2018, 04:14 PM
 
Location: Niceville, FL
7,681 posts, read 16,101,231 times
Reputation: 7700
There are some government programs for the elderly designated for people of very modest means and by minimizing their legal assets, you may help them qualify for more services if/when they need them.
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Old 10-29-2018, 07:53 AM
 
1,230 posts, read 1,557,983 times
Reputation: 2312
When either parent incurs end of life medical bills the hospital or Medicaid (if they qualify for Medicaid) will place a lean on a house in their name, if they do not have the ability to pay. So, don't expect to inherit the house.
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Old 10-29-2018, 08:10 AM
 
3,758 posts, read 10,636,621 times
Reputation: 6686
Quote:
Originally Posted by goywriteswhat View Post
Hello. My dilemma is whether or not to purchase the property with myself as the owner, or put the property in my parents name.

Relevant facts:

I will be paying in cash. Mortgage deductions are therefore not relevant

I give my parents 15k each per year via check. Therefore my annual gift tax threshold is already maxxed out.


Pro's of keeping the property in my name:

- Parents' estate simplicity. Because the property is mine, no paperwork is necessary RE the house when my parents die. This is not a huge deal because my parents' estate will be far too small to worry about any estate tax.

- Cost of home will not be considered a gift. Therefore, the cost of the home will not be added to my lifetime gift tax exclusion (This is a major concern of mine since nobody knows whether Trump's Gift Tax Lifetime Maximum number will hold in future administrations).

- Furniture, maintenance, etc. of the home can also be paid by me without incurring a gift tax.

Cons of keeping the property in my name:


- My personal umbrella liability insurance will increase by a few hundred dollars per year.

- Because the home will not be the owners (me) primary residence, the home will not be eligible for Florida's 25k (value) property tax exclusion. Property tax will therefore increase by several hundred dollars per year.

- If I ever get divorced (not married at present), the home will be my asset and therefore in play during divorce proceedings.

What would you do?

Please let me know if I am missing any relevant considerations. Thank you.

Its nice that you're helping your parents. As to the bolded point (future marriage) - it may have to do with what state your in, but I believe in some states assets preceding the marriage do not come into play in divorce precedings.. only those assets acquired during the marriage.

I think keeping it in your name will largely simplify everything else. Yes, the property taxes will go up more - since it's not your primary residence. If that were going to put you in a financial hardship, that might be a reason not to do it, but it sounds like it won't. It will just be an annoyance.

That annoyance is nothing compared to the potential complications of getting the property back after your folks are gone. Avoiding probate entirely, not having to worry about Medicaid liens, etc...

Good luck with everything - hope your folks love their place!!
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Old 10-29-2018, 08:59 AM
 
Location: Florida
4,365 posts, read 3,698,498 times
Reputation: 4105
I lean toward using the property as an investment but that means rent at some level has to be paid and that may not be possible in your case.

Putting the home in an LLC may help with liability.

A trust maybe the answer. The trust owns the home and you are the trustee. The parents have the right to live in the home but when they die the trust can do what it wants with the home. The key here is you have not made a gift. The trust route probably needs an attorney and CPA that understands the law but I think it is rather easy to do for someone that knows the rules.

Now that I said that a Lady Bird Deed might also be your option. This is a nickname and not valid in all states. I think Fl is ok. The legal name is enhanced life estate deed. Not sure how this would work in your case. Probably you own the property but give the right to live in the home to your parents. There could be some gift taxes in this. I think you can get the homestead benefits.

You could buy the home and sell to them and take back a mortgage at a very low rate. Maybe a balloon mortgage with very low monthly payments. Normally you would forgive the annual payments as a gift but that will not work in your case since you are making gifts now.


You did not mention your parents age but assuming they are young the homestead laws maybe of more value and a gift of cash to buy the home is best. Homestead laws vary by state and I would use an attorney that has experience with the laws of the state to work out your plan. I guess you want to give them a "defective gift" so the gift tax does not apply or a discounted value is assigned to the gift.


Why out on a limb would be giving the money to a charity with the condition that they buy the home and your parents can live in it for life. You would get a charitable contribution for a small part of the costs but I think you would avoid the gift tax and liability problem.


It will be interesting to see the answers to your question.
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Old 10-29-2018, 09:09 AM
 
Location: Raleigh
8,323 posts, read 6,163,226 times
Reputation: 11627
I'd own it as a rental and depreciate it. Don't know if there are caveats to having people live there without collecting market rent, though.
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Old 10-29-2018, 09:24 AM
Status: "Re-edit status" (set 17 days ago)
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
4,170 posts, read 1,895,955 times
Reputation: 3200
We invested in a couple of rentals for diversifying our retirement portfolio-cashflow. I didn't expect the depreciation amount to be significant on our taxes...it is. Our son who is single, is now in the 32% Federal (2018 new) marginal region vs 28% in old 2017 tax. He may want other investments besides his 401k plan and trading account.
Recommend that you see a tax accountant, your lenders and a RE agent.
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