Lynx310650 wrote: ↑
Tue Apr 21, 2020 2:57 pm
I wrote about my parents' financial issues before, their small business is in absolutely dire straits now.
Their primary (and only) asset is their primary residence. Comparable sales were about $550k prior to the pandemic. They owe about $180k.
My parents made me the following proposition. I pay off the $180k for them, they hand over the title of the house in entirety to me. I let them live there rent free for the rest of their lives. We'll work out stuff like property tax, maintenance, etc.
I don't know what the legal (esp tax) implications of this would be, and I'm not sure if this would be an optimal financial move for either party. I could scrounge up the 180k in cash if need be and pay it off. It's an interesting chance to own something "worth" over 500k and pay 180k for it, but at the same time I wouldn't be drawing any income off of it.
Wanted to get the opinions of this forum on such a deal.
I don't have an opinion on the legalities.
What I don't like about this plan is that ..... it ain't a plan. They are having trouble making ends meet so they come up with a scheme to live rent-free by essentially selling you the house for less than market value.
Okay, fine, they've solved the "pay the mortgage problem" by using you as a buyer and throwing away their home equity. Is giving up over 300k in home equity a smart financial move?? This strikes me as desperation. They don't want to admit to neighbors and friends they can't afford the house. I wouldn't want to admit that either, but well, that's where they are.
Now how will they pay for food, clothes, cars, car repairs, healthcare, utilities ..... And by the way, surely you know how stuff like property taxes, repairs, etc for the house is going to "work out." You'll be writing checks for those things.
Your parents are showing that they cannot support themselves, at least not in the style they would like. That doesn't mean they are bad people. But unless they have a plausible way to pay the bills themselves, what you are doing is throwing your money down their drain. You should think really hard about how much damage to your finances you can handle.
Your parents would be much better served by you helping them find a way to support themselves at some level without bailouts from you.