So, this is complicated and convoluted.
My parents(64,63) recently got hit with around a $250k judgment, due in 90 days. They can pay it, but it is a big hit on their liquidity. They are both retired, with my mom receiving around $2500/month in retirement, and my dad having around $9k from rental properties. He owes money on other properties, but I'm not sure the amount. I am not sure how much they have in terms of cash, other than they have several long term CDs, but they have investment properties worth around $1 million, one generating most of the income, the other hoping to eventually receive royalties - neither they want to sell.
Their home is worth, on a low estimate, around $500k, and is paid off. They have been fantastic, have provided for me and my sibling well into adulthood and past the point of us asking them to stop. I want them to continue living their retirement in the way they have been accustomed to, and to not be burdened by this.
I am going to ask them to sell me their house for the judgment amount, using a gift of equity for the down payment, and have them pay the mortgage as rent. The gift amount can go towards their lifetime exclusion on their estate, I had planned on getting the property out of their names in the near future for estate planning reasons anyway, the sale will not trigger any capitals gains on them, while raising the basis for when I eventually sell.
I have no mortgage, my house was financed solely in my wife's name - my credit score is high 700s, my only debt is $480/month student loan payment. I received a pre-approval letter for the amount at 3.96%, mortgage would be about $1200/month at 30 years, exclusive of property taxes. The mortgage amount would be easily paid by my parents while allowing them to keep their investments and not take the hit on their liquid assets. Property taxes would be going up with losing homestead exemption, but not that significant. Plus, me and my wife would be getting a nice deduction on another interest/property tax payment. When they pass or can no longer live by themselves, want to sell, etc, I'll sell and either let them live off the proceeds/split with my brother.
Issues or downsides? Going to discuss with wife, brother, and parents this week, wanting to see if I am missing anything or what else to consider.
Submitted July 23, 2017 at 02:58PM by Am_I_Bean_Detained http://ift.tt/2vNLGiw
