My husband and I want to purchase two homes from his parents; one we will live in the other we will rent. They are willing to sell both houses to us for well below market value. My mother-in-law thinks we should buy one now and one later, but my husband and I want to purchase them both now. What is the best way to purchse these two homes and both of our families benefit from the transaction. I think they would have to gift some of the value of the homes to us and I was hoping to use that as equity as we don’t have a lot of money for a down payment. Anyway, any advice you can give me I would really appreciate. Thanks.
I guess I need more details, but…
I am asking because my mother-in-law is telling me one way to do it and I think it should be another. She told me that there is no tax when you sell to family, but I am pretty sure that is not true. So I am trying to find the best way to purchase these houses so that I don’t have to have a cash down payment and they pay the least amount of tax.
Just had to say one more thing, after the third answer. I think I am being opposite of greedy. I don’t want them (my in-laws) to have to pay anything extra. I want it to benefit them to sell me the houses.
You’ve come to the right place for personal financial advice.
The best way to purchase both homes so both parties
benefit is buy them below market value one at a time as your
mother-in-law thinks. They are being offered below market
value. Good for you. Your listening to your mother-in-law’s
advice. Good for her and family relations. Besides wouldn’t
it help your husband’s parents to be able to claim the tax
credit on two different occasions too. My advice is to don’t be so greedy.
January 31st, 2010 at 7:40 pm
unless you have a tenant in the 2nd one already, it might be tough to get approved for 2 mortgages at once. If they are selling them to you below market – the reduction basically is your down payment or have them make it official and gift the down payment to you (maximum 24,000 – no gift tax required) – must be in writing
References :
January 31st, 2010 at 7:54 pm
Very complex situation here. You need to do some spreadsheet work. How much money are you guys going to earn, how much will these cost, how much will rent bring in.
There are many ways that this could be structured– what’s right for you depends on the specifics of the situation. I’d get all the numbers together and sit down with an attorney or an accountant who specializes in real estate transactions.
Too many variables here for a "cookie cutter" answer.
References :
January 31st, 2010 at 8:40 pm
You’ve come to the right place for personal financial advice.
The best way to purchase both homes so both parties
benefit is buy them below market value one at a time as your
mother-in-law thinks. They are being offered below market
value. Good for you. Your listening to your mother-in-law’s
advice. Good for her and family relations. Besides wouldn’t
it help your husband’s parents to be able to claim the tax
credit on two different occasions too. My advice is to don’t be so greedy.
References :
January 31st, 2010 at 9:14 pm
the houses can be gifted to you
so that taxes are not involved.
or, a lease purchase can be arranged so that you wind up with an immediate
equitable interest.
YOU did not say what you wanted to do with the two.
YOU will need to keep both insured
if you are smart and have two
property tax bills.
Also, the family can put both into LLCs [limited liability companies]
and over time keep on issueing
you more shares in the LLC.
Lots more considerations are available.
Also, what I would do, is have the
parents take out a loan against
each property, at maximum value
and have you and your husband
pay off those mortgages over time.
References :
RE broker