Can my parents gift me their house that they no longer live in and I pay them a fixed amount a month for as long as they are alive
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Can my parents gift me their house that they no longer live in and I pay them a fixed amount a month for as long as they are alive
My parents own asecond home that they rent out can they gift it to
me in exchange for a set monthly amount are their any repercussions
to this for them or myself
Asked on June 15, 2016 under Real Estate Law, Alaska
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
If you pay them for the house, it's not a gift--you are buying it over time. The transaction will be treated legally and for tax purposes like a sale. However, because there is no final or set amount (since you don't know how long they will live), you can't affix a price to the transaction, which could cause tax and other problems. You are better off capping the max price at something close to fair market value: e.g. say the house is worth $250k. They could transfer title to you, and you could pay for it at the rate of, say, $1k per month for the next 20 years and 10 months, with the contract stating that if they both pass before the amount is paid is full, the remaining balance will be forgiven. This will give you a fixed maximum amount to be used for tax purposes while also letting out from paying if/when they pass early. A laywer can help you with the details of structuring the deal, but something like this is the way to go--for a variety of reasons, a sale (which, again, is what is going on if you are paying them money for the home) needs to have some definite price.
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