Parents selling house and giving me the money so i can buy a house. What is downside of doing this?
My parents want to sell their house (CA) and give me the money (200k) so i can buy new house. What is the downside of doing this? Do i have to pay taxes? Will they have to pay taxes?
Also, they are retired and currently receiving social security, medicare, low income subsidy. How will this affect their benefits. After the sale of the house, will the money that they receive count as added income and they will lose their benefits?
Tags: downside, low income subsidy, medicare, medicare low income subsidy, money, parents, social security
December 7th, 2009 at 3:34 pm
This may well jeopardize any subsidy they receive, such as Medical. If they give you the money, it is not taxable to you or deductible by them but they will need to file Form 709 Gift Tax Return.
They should seek legal counsel before doing this.
December 7th, 2009 at 3:34 pm
ok, if your parents have such low income why on earth would you agree to take all of their profits from selling their house???? that is rather selfish, dont you think??? how about you use $20,000 of the $200,000 for a down payment on a modest house and pay the mortgage note with your own money so your parents do not have to be on low income subsidy programs hmmmm?
December 7th, 2009 at 3:34 pm
This seems like a pretty scary and costly situation. I highly recommend that both you and your parents seek out a competent CPA. My experience tells me that the house should be put into a trust or perhaps a self directed IRA "Before" they sell it. Just based on what you said you will all get hit with unnecessary taxes.