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07.15.08, 17:48 PM General Topics
28 replies
We want to move closer to my family. We have a small house we bought at the height of the market. My parents want us to take over their house for a small payment. Should we rent our house out or brave the market. [ Reply | Watch | Flag ]
General Topics 07.15.08, 05:48 PM Flag
 

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rent if you can. but where is the house? [ Reply | More
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General Topics 07.15.08, 05:49 PM Flag
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near princeton, NJ [ Reply | More
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General Topics 07.15.08, 05:50 PM Flag
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I am a Realtor and you can rent if you don't need the cash but don't try to time the market for profit...it just doesn't work. [ Reply | More
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General Topics 07.15.08, 05:56 PM Flag
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no we are just hopeing to pay the morgage if that [ Reply | More
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General Topics 07.15.08, 05:57 PM Flag
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So list it for 45 days and at Day 30 start looking for renters. [ Reply | More
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General Topics 07.15.08, 05:59 PM Flag
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can you find renters [ Reply | More
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General Topics 07.15.08, 05:56 PM Flag
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I am sooo jealous! Go for it. My parents live in a huge house that is ridiculous for them but they won't give it to us (which of course they are under no obligation to do) in exchange for a smaller house we would buy for them. All their savings is tied up in this house. Waaaaah! [ Reply | More
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General Topics 07.15.08, 05:50 PM Flag
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My mother lives in a huge 2 br in Greenwich Village - would love it if she did this but not expecting that [ Reply | More
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General Topics 07.15.08, 05:52 PM Flag
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the house needs updating but it has an apartment on it so my parents may move there or a smaller house. I hope my dh knows what he is getting into moving closer to my mom and sisters :) [ Reply | More
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General Topics 07.15.08, 05:52 PM Flag
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Before you do anything, consult a tax attorney. If you don't do this absolutely perfectly, your parents will owe a fortune. [ Reply | More
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General Topics 07.15.08, 05:55 PM Flag
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how so? [ Reply | More
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General Topics 07.15.08, 05:57 PM Flag
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The difference between what your parents take as a "small payment" and the market value of the home is a gift. Your parents (two people) can give you and DH (two people) $48,000 a year tax free. Anything above that, they have to pay the gift tax. So take the market value, less the payment, less $48,000 and that is the tax basis. Assume a 45% tax rate. But it can get more complicated from there. This used to be a popular form of gift/estate tax evasion. The IRS knows all about it. [ Reply | More
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General Topics 07.15.08, 06:01 PM Flag
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not or, but it will also get hit with more capital gains tax when they sell unless they move back in for a couple year (I don't know the exact figures), b/c it will no longer be a primary residence. [ Reply | More
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General Topics 07.15.08, 06:05 PM Flag
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no that is no longer true [ Reply | More
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General Topics 07.15.08, 06:06 PM Flag
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really? So if I sell my rental house, there's no capital gains? I seriously doubt this. [ Reply | More
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General Topics 07.15.08, 06:10 PM Flag
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Who is talking about rental property? This is her mothers home. There is a one-time capital gains exemption for the sale of your primary residence (occupied for 2+ years). [ Reply | More
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General Topics 07.15.08, 06:30 PM Flag
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if she's renting it out, then it becomes a rental property. I didn't get the sense that the parents were staying in it. [ Reply | More
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General Topics 07.15.08, 06:33 PM Flag
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What is we just rent to own? [ Reply | More
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General Topics 07.15.08, 06:12 PM Flag
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OR: Assuming it is an arms length transaction, you (and they) are fine. [ Reply | More
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General Topics 07.15.08, 06:14 PM Flag
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That's what I think we will do. Once the market improves we will sell are Princeton Property and be able to give a good down payment and buy the house. [ Reply | More
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General Topics 07.15.08, 06:15 PM Flag
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But what would you be paying for the house? The market price? Or a preferred price? [ Reply | More
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General Topics 07.15.08, 06:17 PM Flag
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It would depend, I have 4 sisters so I think we would pay market price and draw up a private mortgage so it would be fair. It will be great not to have to pay all those fees and s [ Reply | More
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General Topics 07.15.08, 06:21 PM Flag
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Private mortgages can be a great tool. Just be aware (hope I am not freaking you out) that the IRS will expect your parents to declare the interest as income. If they don't think the interest is high enough, they will apply a higher interest rate, count that as income, AND treat it as a gift to you. So your parents pay taxes on money they didn't give or receive. Nice, huh? [ Reply | More
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General Topics 07.15.08, 06:24 PM Flag
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damn government [ Reply | More
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General Topics 07.15.08, 06:25 PM Flag
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This is why lawyers have job security. [ Reply | More
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General Topics 07.15.08, 06:27 PM Flag
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What can be done though, is the house can be placed in trust and gifted to you in shares small enough that no gift taxes are required. [ Reply | More
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General Topics 07.15.08, 06:04 PM Flag
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my dad is really good with this stuff. I think he has a plan. [ Reply | More
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General Topics 07.15.08, 06:06 PM Flag
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Unless he is a tax attorney, he should consult one. Your dad may know a lot about tax code, but unless he is certain that he is absolutely current on all relevant sections of the code and all PLL, he should get a consultation. GL! Sounds like a wonderful deal. [ Reply | More
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General Topics 07.15.08, 06:10 PM Flag
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