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Okay...this is confusing. It sounds like you have already entered a contract or have a contract pending. If either, you still need to get legal advice.
Depending on the terms of the agreement, it might be considered an actual sale at the time of execution. That would impact how you would need to treat the income. Plus, if you get legal advice, you may be able to make needed changes to any pending contract before the terms are set in stone.
No, the house is vacant. I haven't entered into any contracts. I was just running the idea past people to get their opinion on whether I should but you've all convinced me it's a bad idea so I'm going to forget about it.
Hope the conversation keeps going but thanks to all who advised in case it doesn't.
I would again suggest that you meet with an attorney--an elder law/estate attorney--to discuss your situation. If you hold title, subject only to your mother's life estate interest, you may be able to sell at this time if she is unable to return and live in the house.
I own a house in Southern Cal. Fair estimate is $750,000 3+2 1500 sq ft. I'd like to consider renting it to a nice couple to own. I'd like to know if it's feasible to do it unconventionally in that I would let them rent on a 15-year lease and at the end of the 15 years I or my successors would hand them the keys. I own the house outright. I like the idea of a steady income in my remaining years (I'm 63) plus the house needs some repairs that I would just let the renters-to-be-owners handle. I calculate a mortgage payment for 15 years @3% would be roughly $4000 so I figure that would be the payment over the 15 years. Since this is an inherited house I get the step-up in basis to the full value so I don't owe any capital gains or inheritance taxes. I'm basically just taking the 750K in monthly payments instead of one lump sum and just pay taxes on any interest. Does this sound doable? Thanks for any feedback on the pros and cons.
3. The reason I don't want to carry an outright mortgage is because I'm afraid the next few years the sellers would sell the property to God-knows-who and I'd have to take the full amount, which might change the step-up qualifications and subject me to a full tax on the difference between the original purchase price (29K) and the current payoff (750K).
Since Taxes seem to be your biggest issue, have you talked to a tax specialist?
I would again suggest that you meet with an attorney--an elder law/estate attorney--to discuss your situation. If you hold title, subject only to your mother's life estate interest, you may be able to sell at this time if she is unable to return and live in the house.
That's an interesting suggestion. I do hold the deed which states clearly "subject to life estate by grantors" (my deceased stepfather and mother). It's called an "incomplete" gift in that the grantors retain an interest and thus the IRS will still allow the step-up (unless the SOB's rescind the allowance at some point). That IS something I should look into as she can never return to the house. Thanks for the suggestion.
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