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Buying a House for Your Parents
My mother-in-law rents a small apartment in a building that was just purchased by a new owner. My husband and his sister (her only two kids) are interested in pooling our mutual (limited) resources to purchase a new home for her. I'm wondering if anyone has advice on a) how to structure the relationship with the sister and her husband legally and 2) about the tax consequences of this arrangement for all parties, esp. should my mother-in-law's name appear on the deed? She is planning to pay us rent and we will be paying the balance of her new mortgage. Any advice on these or any other pertinent questions would be highly valued, as I am totally out of my league on this. Please respond to the digest. Many thanks.
So no, the mother-in-law should not have her name on the deed (she doesn't own the place -- and putting her on the deed means she does have ownership rights and might make settling the apartment on her death tricky).
Second, regardless of how they feel about each other, brother and sister need a written agreement about who owns what part of the apartment (50-50 or something else) and who is responsible for management (getting the rent check, deducting maintenance and real estate taxes from the rent, and distributing profits if any). They might also want some tentative agreement about how they'll handle the property during their mother's life (if one sibling hits hard times or goes bankrupt, can they or their creditors force sale of the property??? -- I think there are mechanisms that can protect against this situation which would be hard on siblings and parent) and after she dies (again, do you hold it as a joint investment until both parties agree to sell it or is sale of the property the default unless both parties agree differently??).
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