U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 01-19-2018, 04:04 PM
 
764 posts, read 523,677 times
Reputation: 689

Advertisements

I'm in a position where I could buy my parents house. I can afford it, and I would be doing it for two main reasons. Number one would be to help them, even though they don't seem to need it. And number two, I would finance it and would hope to write off the interest, since I would be owning it as a second home.

My parents haven't mentioned this to me. I'm just brainstorming it for myself. I see these reverse mortgage commercials all the time. If I did this, wouldn't this just be doing the same thing, except I'm the bank?

I'm sure I'm not the first person to inquire about this. What am I looking at from a legal standpoint or other ramification? Would I have to charge them rent, even it it was just $1 per month for legal paperwork reasons?

Hoping to get some input on doing this. They are 77 and doing well. I'm just thinking long term.
Rate this post positively Reply With Quote Quick reply to this message

 
Old 01-19-2018, 09:46 PM
 
Location: Columbia SC
12,670 posts, read 11,276,529 times
Reputation: 18611
Blaz

I have seen two family battles about buying parents home/land. Basically the root issue/problem was fair market value. We presently have a situation in my family. Not to go into all the details but the home was left to 3 of us and a child of one of us (not mine) wants to buy the home. I have said let us get two independent appraisals on the home value so we can establish a fair market value and the family member can buy it for the average appraisal price less 6% which would be a realtor fee if we involved a realtor.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-19-2018, 10:59 PM
 
Location: Wasilla, AK
7,449 posts, read 5,948,459 times
Reputation: 16456
Bear in mind that the new tax law has changed how much you can deduct in mortgage interest. I would do a little research before committing. Also bear in mind that the deduction limit for property, local income tax and state income tax is $10,000. That's going to cost a lot of two house owners. I'm lucky, because I live in a no income tax state and the property taxes on both my homes is less than $10,000. But your situation might be different.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-20-2018, 07:05 AM
 
Location: The Triad (NC)
31,994 posts, read 73,786,833 times
Reputation: 38977
Quote:
Originally Posted by Blazin65 View Post
Number one would be to help them, even though they don't seem to need it.
Hoping to get some input on doing this. They are 77 and doing well.
Are Mom & Dad sharing their financial data with a qualified professional?
Do they have the Elder Attorney? The CPA? The Financial Planner?

If so... go play some golf.
If not... then help connect them with one or more of those professionals.

Quote:
I'm just thinking long term.
If it turns out that they actually DO need financial & advisor help ... help them.
Selling a home comes into play at some point for most older couples
and how they manage that (when more often) can make a very big difference.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-20-2018, 07:56 AM
 
Location: Rochester, WA
10,211 posts, read 7,016,153 times
Reputation: 27897
If they sell it now, depending on what they paid for it and when, they may owe substantial capital gains tax on it. That's the unfortunate implication for many older people who need to sell without buying another home.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-20-2018, 08:16 AM
 
7,983 posts, read 10,373,222 times
Reputation: 14860
Quote:
Originally Posted by Diana Holbrook View Post
If they sell it now, depending on what they paid for it and when, they may owe substantial capital gains tax on it. That's the unfortunate implication for many older people who need to sell without buying another home.
Not if the house has been their primary residence, which sounds to be the case (assuming their gain would be less than $500K). I think you're mistakenly remembering the day when another house of equal or greater value had to be purchased to avoid paying capital gains tax.

OP--it's good to think long term, but I wouldn't recommend buying their house. What are their estate plans? Would you inherit the house down the road? If they eventually need help, help them when the time comes. Buying their house seems to be an unnecessary complication that could have many downsides, particularly long-term tax implications.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-20-2018, 02:05 PM
 
Location: Raleigh NC
23,255 posts, read 12,764,868 times
Reputation: 13699
Didn't the new tax plan do away with interest deductibility on newly-purchased second homes?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-20-2018, 02:14 PM
 
Location: Rochester, WA
10,211 posts, read 7,016,153 times
Reputation: 27897
Fair enough... good to know, thanks Jack.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-20-2018, 04:34 PM
 
476 posts, read 283,436 times
Reputation: 1446
My father-in-law did this, but it has been 30 years ago (or more). Basically, he was the one child with real money. He earned it the hard way, starting as a janitor at a company and ending up owning it. But, still, his brothers and sisters expected him to support their mother after the father died.

So he bought her house. She then had this money to live on. What he wanted to avoid was supporting his mother by himself and then having her house divided among all of his siblings. It didn't have a lot of value other than sentimentally, but it was his family homestead. After the money ran out, he simply supported her.

So is that what you are trying to do? And as others have said, will the new tax laws let you do it?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-20-2018, 07:01 PM
 
Location: Wasilla, AK
7,449 posts, read 5,948,459 times
Reputation: 16456
Quote:
Originally Posted by BoBromhal View Post
Didn't the new tax plan do away with interest deductibility on newly-purchased second homes?

It lowered it.
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate

All times are GMT -6.

© 2005-2021, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top