moreluck
golden ticket member
I'm pretty sure the inheritance tax is "only over a certain amount....like the first $500,000 isn't taxed.....but I'm not sure what the exact amount is....too early here to be Yahoo-ing!
Advice Needed
- Thread starter UpstateNYUPSer(Ret)
- Start date
klein
Für Meno :)
If that's the case, then that's Upstates solution , it's having trust on both sides, and that's great !
UpstateNYUPSer(Ret)
Well-Known Member
Cheryl, thanks for your input. This is not really a gift--the money would be going directly to their mortgage and I would basically be prepaying my rent. The IRS does allow for direct payments for indirect benefits in excess of the annual gift limit. The townhouse that they are buying is one of four in the complex and their hope is to eventually own all four.
We would need to sit down with a professional to see if this is even legal and, if it is, what would be the best way to go about it.
UpstateNYUPSer(Ret)
Well-Known Member
Well, it turns out that, according to the IRS website, advance rent would be considered income in the year that it is received, so this idea would have tax implications for my daughter and son-in-law.
We need to talk with a professional to see what the best course of action would be.
We need to talk with a professional to see what the best course of action would be.
UpstateNYUPSer(Ret)
Well-Known Member
This is different in that it does not involve which job classification I wish to bid. That would be a personal decision not based upon the input from strangers. In this case, I have an idea and was looking for advice on whether it was good or bad idea. I was also looking for suggestions as to the best way to go about this from a financial standpoint with minimal tax implications. I would then take these suggestions and discuss them with my daughter and son in law to see if this is something that we want to do and, if so, decide the best course of action. I would think that we would also seek the advice of a professional.
Asking the opinions of strangers as to which job you would be doing for the next bid cycle is simply foolish.
CaliforniaPaul
Well-Known Member
Who cares??
brownmonster
Man of Great Wisdom
Are you also helping your son in the same fashion? We try to be as even as possible with the kids.
I also asked advice in another thread, but Upstate seems to think only he is capable of asking for the right kind of advice. Anyone else asking for advice is obviously misguided.
UpstateNYUPSer(Ret)
Well-Known Member
I guess I am not explaining myself very well. This would not be a loan. This would not be a gift. I would simply be using the proceeds from the sale of my condo to prepay my rent at my daughter and son-in-law's townhouse. I expect to net $90K when I do sell this place. At $1K/month I would be prepaying 90 months, or 7.5 years, of rent. I would be receiving a benefit (no rent payment) in exchange for my payment. They would be receiving a benefit (reduced mortgage) in exchange for my payment. Ours would be much like any other landlord/tenant relationship except that I would offer to babysit the grandkids so that they could have a date night.
I did read this morning on the IRS website that landlords who receive advance rent must consider that as income received in that year and would have to pay taxes on that income. My thought to get around this would be that they would not consider the townhouse to be a rental property for the period of time that I would be living there. The downside to this is that they would not be able to write off their mortgage interest as it would be a second home rather than a rental property. As you can see I still have a lot of research to do on this.
If this were indeed a gift then you would be absolutely correct. If it turns out that my idea is not feasible then I would most likely use the proceeds from the sale of my condo to help out both kids.
UpstateNYUPSer(Ret)
Well-Known Member
The difference being I was asking advice on an area with which I am not very familiar. You were asking advice on an area with which you are very familiar. Both decisions should be made after discussing the pros/cons with family and/or a financial advisor.
Here are a couple of off the wall ideas to avoid taxes... You could give them the money as a "loan" that she would use to pay off the mortgage on the property. Then you take back a principle only trust deed on the property. Leave the trust deed to her as sole and separate property in your will. Then if in the future she ever splits up with what's his name he wouldn't get 1/2 of your money.
or
Interest rates are low and money is cheap right now so she could lock in these great rates with a fixed rate loan and then you could just pay her rent like any other tenant would. Since she wants to buy additional units maybe you could buy a second unit jointly with her, or just be the bank and finance the second unit using the proceeds from your condo. Then you could manage the units for a discount on your rent.
or
Interest rates are low and money is cheap right now so she could lock in these great rates with a fixed rate loan and then you could just pay her rent like any other tenant would. Since she wants to buy additional units maybe you could buy a second unit jointly with her, or just be the bank and finance the second unit using the proceeds from your condo. Then you could manage the units for a discount on your rent.
ajblakejr
Age quod agis
Dave, In a sense, by making a commitment to this living arrangement, aren't you also making a commitment to not falling love and finally finding happiness with the woman of your dreams?
I would think, and I could be very wrong, that if you did meet that special someone...
I would think, and I could be very wrong, that if you did meet that special someone...
UpstateNYUPSer(Ret)
Well-Known Member
It's almost lunch time---did you want to post a poll to see what you should have for lunch?
ajblakejr
Age quod agis
I understand he will not be living with his daughter.
I am thinking about the commitment to living in the same place for the duration of his "rental agreement".
I am just pointing out, if someone was to fall in love and decide to build a successful relationship including marriage, I don't think she would like this type of arrangement.
She may have her own house or prefer to start fresh with her love interest and purchase a place together.
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