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Old 02-08-2018, 11:58 PM
 
11,261 posts, read 11,276,606 times
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Quote:
Originally Posted by oldtrader View Post
Don't be so sure of this. When you say your mother cannot get over a $2,000 loan they are wrong.

You are not looking as a loan based on income as you and so many are thinking. Find a good mortgage broker, and they can arrange a 5 year loan, with the payments prepaid as I suggested. The value of the property, would be so excessive of requirements, and 5 years payments prepaid at closing that they would use that to get the loan. Be one of the best loans they could make.

Forget about buying a personal residence with a 30 year mortgage. That does not apply to what I am suggesting. I many times over the years, arranged mortgages that were no where near being qualified for under normal loan situations.

Example years ago, when I was in the business. A widowed woman came to me, with problems. She owned a free and clear home worth at the time $40,000 which today would be worth multiple times that. She was broke, and did not even have money to eat. She could move half a day drive across the state and live with her parents, and had a job to support herself waiting for her. The home needed $2,000 worth of work to prepare for sale.

I made a call to a banker I knew, explained she needed a $10,000 loan, due in full within 1 year.
With that equity, he told her to come on in. It was appraised by the bank's appraiser, and 3 days later she had $8,000 after depositing $2,000 in my escrow account to pay the clean up. I sent my part time crew and a week later, the home was ready for sale and some of the $2,000 deposit to my escrow account still there to pay utilities we kept on. A week later, it was sold by another office, and we split the commission. The bank got their money back within 6 weeks of making the loan along with their fees and interest. I got a job to keep my part time crew working and they were happy. I got the listing commission for about 3 hours work on my part. The lady sold her home for it's full value less selling costs and the repairs.

This woman had no income, no money in the bank, but owned a free and clear home. She did not qualify for a loan, but her security did and she got the loan very easily, by me making one phone call. Get a good mortgage broker working for you who understands doing such a thing, and they can make it happen.

I am telling you about this, to show it can be done, and a good mortgage broker can arrange it.

If you don't have the power now to handle such a thing, get a good attorney, and as you are her executor, get you made her legal representative to sign for such a mortgage and other necessities which will be easy to do.
Yeah, I assume it can be done but the hoops I'd have to jump through to do it may be more than I can handle. I have my own health issues and there's no such thing really as taking the long view on this. Assume my mother still has three years and whatever is left passes to me. Not having any children to pass anything on to and given I have say 10 more years, even 450K might outlive me. Like I said I got to be philosophical about it. It's like the home's value is only 550K and I got it tax free.
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Old 02-09-2018, 01:19 AM
 
Location: Lexington, Kentucky
7,000 posts, read 4,004,628 times
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My best advice would be to consult a tax attorney.
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Old 02-09-2018, 05:00 AM
 
26,591 posts, read 52,334,622 times
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Quote:
Originally Posted by oldtrader View Post
You are overlooking the gift tax due less $14,000 per heir when she makes that gift to her heirs. You cannot make a gift today as early gift from an estate to beat taxes. The gift becomes gift taxable on day it is made.
A family member successfully used Gift with Life Estate for his mother... the "Value" was substantially reduced due to the Life Estate plus he was able to retain the Mother's Prop 13 assessment... parent/child transfer.
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Old 02-09-2018, 05:09 AM
 
26,591 posts, read 52,334,622 times
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Quote:
Originally Posted by thrillobyte View Post
I just spoke with a CPA. He's says there is no way to escape paying the 220K capital gains.
We are going through this right now with a property bought in 1967... all things considered the option chosen was an installment sale... otherwise known as seller financing...

It set up income for Mom and minimized the current tax impact.

It has also triggered and audit which the Tax Lawyer says is typical but no worries as it is an arms length transactions, brokered sale and at market rate...

I wanted to hold onto the property but am only one voice... my father's brother was also involved so there were many ideas but no one was willing to put up money to take care of deferred maintenance and I was not going to fund and do the work either...
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Old 02-09-2018, 05:12 AM
 
26,591 posts, read 52,334,622 times
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Quote:
Originally Posted by mathjak107 View Post
today you need the same criteria to get an equity loan as a mortgage , namely a good solid income .
Or a hard money lender... we know a few that make a living doing this... 50% loan to value at above market rates...
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Old 02-09-2018, 05:16 AM
 
71,700 posts, read 71,829,507 times
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yep , we looked in to asset based loans and they will discount the portfolio by 50% and rates were higher . i rather just pay cash . but if we do buy in the spring i will apply for a mortgage being now i am collecting ss so that should help . initially i was delaying and my wife collecting when i inquired .
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Old 02-09-2018, 05:22 AM
 
26,591 posts, read 52,334,622 times
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It was a rude awakening for me to learn that Mom and Pop rental income is basically discounted so heavily that you are lucky to break even when applying for a conventional loan.

Have decades of income tax returns showing rental income but it did little and having rental income really complicated the loan process... so much so it shifted my focus on seller financing and cash purchases.
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Old 02-09-2018, 09:58 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,628 posts, read 39,998,659 times
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Quote:
thrillobyte
I just spoke with a CPA. He's says there is no way to escape paying the 220K capital gains.
2nd opinion from a much more 'creative' CPA (I usually consult "Registered Agents" to get my 'better' ideas.)
Quote:
Originally Posted by Ultrarunner View Post
We are going through this right now with a property bought in 1967... all things considered the option chosen was an installment sale... otherwise known as seller financing...

It set up income for Mom and minimized the current tax impact.
...
^^^ do this ^^^ (a really great option in most cases)
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Old 02-09-2018, 10:38 AM
 
11,261 posts, read 11,276,606 times
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Quote:
Originally Posted by Ultrarunner View Post
We are going through this right now with a property bought in 1967... all things considered the option chosen was an installment sale... otherwise known as seller financing...

It set up income for Mom and minimized the current tax impact.

It has also triggered and audit which the Tax Lawyer says is typical but no worries as it is an arms length transactions, brokered sale and at market rate...

I wanted to hold onto the property but am only one voice... my father's brother was also involved so there were many ideas but no one was willing to put up money to take care of deferred maintenance and I was not going to fund and do the work either...
The thought of an installment sale passed through my mind but it requires having the asset paid off long term like a bank and not all buyers want seller financing, believe it or not.

Even if my mom moves in with a full-time aide to look after her she'd only get a 250K deduction which would result in only 95K in savings against having to hire a 24/7 aide @ roughly 75K per year. I see no tax benefit gained there, at least not enough to justify moving her in and waiting for 2 years and possibly having the market fall through. And I would only do this if she wanted to live there. Assuming she didn't I'd drop the idea.

From all angles it seems I cannot escape a horrendous 240K capital gain. I should count my blessings I can get that much for her, I suppose. After all, she only paid 15K for it.
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Old 02-09-2018, 10:54 AM
 
26,591 posts, read 52,334,622 times
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Some would say it is a good problem to have... referring to the gains

I'm in a somewhat similar position with my mom... not at your stage as she is very healthy but has Alzheimers and it is getting worse... no way she can live alone now.

Over the holidays I took here to visit a friend from way back when my parents married... he is in a memory unit and couldn't tell what day, month or year... etc... Mom is similar.

An amazing thing happened when they saw each other... they talked for almost an hour and it was all things from decades ago... he was my Dad's best friend and college roommate... the nursing staff was astounded to hear their conversation of minute details, the wedding, the reception etc.

I'm doing everything I can to keep her in familiar surroundings with neighbors of many years...

The installment sale was a way to gain income, both principal and interest at 5%... of course, the buyer can pay off the mortgage but it has been 14 months now and the check arrives like clockwork...

No doubt, this is a seller's market and no one knows the future...

The Grandmother from one of my friends lives in Loma Linda California... bought the home in 1960... and it is worth quite a lot today.

She is very sharp but physically dependent....

Loma Linda has a Medical University and no shortage of medical students... she provides room and board to Medical Students in exchange for care... it has worked well... and some have become like family.

I believe all were Seventh Day Adventist... not that it matters but she was very happy with all of them and a few of the nursing students originally came from the Philippines... being walking distance from the University was her salvation... never had to look for replacement students as there were many wanting such an opportunity... all going back to the luck of her first student who is now an Intern.

Last edited by Ultrarunner; 02-09-2018 at 11:03 AM..
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