buying a house of your parents/family

**micifus** · 06-30-2008, 09:37 PM

My parents are looking to move out. So they said they would sell me the house. I would pay them a monthly fee interest free no banks involved(the house is paid for too no liens). Has any one done this and how did they go about this?

kiksroks · 06-30-2008, 09:42 PM

Sounds like a hell of a deal to me, as long as the asking price is in line...I would reccomend you see a real estate broker to set up the deal. They'll know all of the laws and what not regaurding this kind of transaction. They will probably want a commission though not as much as an agent. MAybe you or your parents have a trusted freind or family member in real estate that could help you out.

Jeepster55 · 06-30-2008, 09:43 PM

get it in writing and all parties sign it!

God forbid anything happen to your parents, but if it did, you have something i writing to show that you are buying it from them. also, they should make sure that this is addressed in their will and whether they leave you the house free and clear OR that you have to continue payments to the estate.

it will work, just make sure everyone is on the same page!!!

**Matt Gertsch** · 06-30-2008, 10:02 PM

Skip the agents, there's no need for anyone to broker the deal. Do go to a title company though, so everything is in order there. All it would take is one "illegitimate kid" to pop out of the woodwork somewhere upon the departure of one of them to throw a wrench into your deal.

Indy · 07-01-2008, 02:16 AM

Get the whole thing in writing and then make sure you stick to the deal. Nothing worse than having a family break up from a broken verbal.

GoldenP51 · 07-01-2008, 02:59 AM

Quote:

Originally Posted by Indy

Get the whole thing in writing and then make sure you stick to the deal. Nothing worse than having a family break up from a broken verbal.

Ditto...get it in writing...no writing = massive failure

pyro9862 · 07-01-2008, 05:02 AM

Get a real estate lawyer to draw everything up. No need for an agent, a lawyer would be cheaper then an agent. They have a set hourly rate or will give you a set price, they don't work on commission. A decent lawyer will be able to set everything up so that you don't get screwed if something happens to your parents. If you try and do it yourself it may end up costing you a ton in legal fees down the road trying to keep the house if your parents end up running up debt. It's pretty easy to do if they ever get sick or have to go into assisted living.

Dr. Righteous · 07-01-2008, 07:08 AM

I have to agree with a written agreement. Not that you parents would kick you to the curb, but it is very possible after they are gone, someone may show up and claim that they own the house and and you will have nothing to show. If they have some kind of documentation (no matter how ridiculous their claim) and you have nothing, the courts see you as a squatter. This sound unlikely but this happened to a relative of my in-laws. He purchased a small house and property on a hand shake deal with some relatives. He paid for it in full. After they died their kids show up and demanded he vacate the property because they wanted to sell it.
He had nothing in writing. He got kicked out.

Willys2TJ · 07-01-2008, 08:04 AM

Have a real estate lawyer draw up the papers and also talk to a CPA about the "no interest".

The IRS has some strange rules about this and I remember something about "implied" interest. They might consider part of the payment "implied" interest meaning the parents would have to claim part of the payment as interest or they might consider part of it a gift, in which case there might be Gift Taxes due that you have to pay. The IRS doesn't seem to like "no interest" deals.

Lots of places to get into traps in these deals. Get it figured out before you sign anything. Fixing it later is much more expensive than setting it up right.

Indy · 07-01-2008, 10:10 AM

I didn't think about the tax man. Since the house is paid off your parents will have to claim the payments as income. Easy to let it go and assume the IRS won't ever know about it, but I think the title company has to report the sale of the house once the deed is transferred. No worries, but don't forget about it either. Audits can't be fun.

Only work around I could see would be to claim they gave the house as a gift, but I'd probably call an accountant and see how the gift would be taxed as well.

jamtoy · 07-01-2008, 05:17 PM

The best deals you make with family are the ones you don't.

kiksroks · 07-01-2008, 07:09 PM

Quote:

Originally Posted by jamtoy

The best deals you make with family are the ones you don't.

very true... just be sure that everyone is crystal clear as to the terms of the deal and do your part. I really don't think your parents would try to screw you... Have you done the math on the interest and payments? The savings could be huge over the typical, borrow as much as you qualify for, home loan. Could turn into a great asset for you.

07-01-2008, 02:16 AM	#5
Indy Registered User Join Date: Oct 2004 Location: WY Posts: 1,452 Profile Gallery Classifieds My Jeeps	Get the whole thing in writing and then make sure you stick to the deal. Nothing worse than having a family break up from a broken verbal. __________________ Never underestimate the power of stupid.

07-01-2008, 08:04 AM	#9
Willys2TJ Registered User Join Date: May 2004 Location: Central Indiana, IN Posts: 65 Profile Gallery Classifieds My Jeeps	Have a real estate lawyer draw up the papers and also talk to a CPA about the "no interest". The IRS has some strange rules about this and I remember something about "implied" interest. They might consider part of the payment "implied" interest meaning the parents would have to claim part of the payment as interest or they might consider part of it a gift, in which case there might be Gift Taxes due that you have to pay. The IRS doesn't seem to like "no interest" deals. Lots of places to get into traps in these deals. Get it figured out before you sign anything. Fixing it later is much more expensive than setting it up right. __________________ Playing with Jeeps since the 60's.

07-01-2008, 10:10 AM	#10
Indy Registered User Join Date: Oct 2004 Location: WY Posts: 1,452 Profile Gallery Classifieds My Jeeps	I didn't think about the tax man. Since the house is paid off your parents will have to claim the payments as income. Easy to let it go and assume the IRS won't ever know about it, but I think the title company has to report the sale of the house once the deed is transferred. No worries, but don't forget about it either. Audits can't be fun. Only work around I could see would be to claim they gave the house as a gift, but I'd probably call an accountant and see how the gift would be taxed as well. __________________ Never underestimate the power of stupid.

06-30-2008, 09:43 PM	#3
Jeepster55 Registered User Join Date: May 2007 Location: Indianapolis Posts: 450 Profile Gallery Classifieds My Jeeps	get it in writing and all parties sign it! God forbid anything happen to your parents, but if it did, you have something i writing to show that you are buying it from them. also, they should make sure that this is addressed in their will and whether they leave you the house free and clear OR that you have to continue payments to the estate. it will work, just make sure everyone is on the same page!!!

07-01-2008, 05:02 AM	#7
pyro9862 Registered User Join Date: Mar 2004 Location: Long Island, NY Posts: 1,563 Profile Gallery Classifieds My Jeeps	Get a real estate lawyer to draw everything up. No need for an agent, a lawyer would be cheaper then an agent. They have a set hourly rate or will give you a set price, they don't work on commission. A decent lawyer will be able to set everything up so that you don't get screwed if something happens to your parents. If you try and do it yourself it may end up costing you a ton in legal fees down the road trying to keep the house if your parents end up running up debt. It's pretty easy to do if they ever get sick or have to go into assisted living.