Needing some advice. Parents are reaching retirement age (currently 62) and aren't in great health, but aren't in a great position financially to retire. My wife and I are considering purchasing a home near us for them to live in, but have some questions around the best way to do it, and see if there's anything else I need to be considering.
They currently own their home outright, far away from their kids and grandkids. I was thinking it might be good if they could sell that house, invest the return, and draw on the gains from that investment.
I plan to talk to a mortgage lender soon about this also. Anyone else I should be reaching out to (tax professional)?
Should I take out a mortgage for the second house, or refinance my existing house and pay cash?
I am 9 years into a 15 year note on my existing house, and prices have increased significantly in my market. I owe $85k and the my guess at market value is $250-280k. I have around $40k in cash on top of that. I'm looking at $180k-$200k for the second house. I think the interest rate would be higher on a second house. Refinancing my existing one would start the clock over, but I would be paying a mortgage for 15 more years either way and I'll still be working past that anyway. I guess I need to run the numbers on how each option would affect my cash flow. Any other factors to consider?
Should I charge them some rent for staying in the house, or let them stay for free?
They could probably afford to pay something, but less than market value. Paying something would probably be easier on their pride. I'm pretty ignorant on the implications of each option apart from that.
Capital Gains Tax
I don't think this would be an issue until decades from now, but anything to factor in here for now?
Cash Gifts
This could possibly come into play, either if we use a portion of the proceed of their home to help purchase this new home with cash (them to us), or if we end up giving them some cash to help them buy the new house themselves. Does the $15k annual limit apply to each individual? Could one couple give another couple up to $60k?
They currently own their home outright, far away from their kids and grandkids. I was thinking it might be good if they could sell that house, invest the return, and draw on the gains from that investment.
I plan to talk to a mortgage lender soon about this also. Anyone else I should be reaching out to (tax professional)?
Should I take out a mortgage for the second house, or refinance my existing house and pay cash?
I am 9 years into a 15 year note on my existing house, and prices have increased significantly in my market. I owe $85k and the my guess at market value is $250-280k. I have around $40k in cash on top of that. I'm looking at $180k-$200k for the second house. I think the interest rate would be higher on a second house. Refinancing my existing one would start the clock over, but I would be paying a mortgage for 15 more years either way and I'll still be working past that anyway. I guess I need to run the numbers on how each option would affect my cash flow. Any other factors to consider?
Should I charge them some rent for staying in the house, or let them stay for free?
They could probably afford to pay something, but less than market value. Paying something would probably be easier on their pride. I'm pretty ignorant on the implications of each option apart from that.
Capital Gains Tax
I don't think this would be an issue until decades from now, but anything to factor in here for now?
Cash Gifts
This could possibly come into play, either if we use a portion of the proceed of their home to help purchase this new home with cash (them to us), or if we end up giving them some cash to help them buy the new house themselves. Does the $15k annual limit apply to each individual? Could one couple give another couple up to $60k?