Hi Money Minder,
I’ve got a bit of a story to share and need some help figuring things out. I built a home back in 2004 valued at around $200,000. Then, I gave it to family members who have kids with severe disabilities. The husband is a retired military, and one of the children can work, but they depend on disability benefits for all the kids. It’s a tough situation, with a 30-year-old still in diapers due to severe autism.
The house is a 6-bedroom with two kitchens and a fenced-in yard, located in a subdivision around 45 miles from Atlanta. They didn’t have great credit or much financial knowledge, so I’ve helped them out with buying cars and other stuff. But things are a bit slow in their world.
The home’s value has gone up to around $350,000 now, and while they’ve managed expenses, I can’t even bring myself to visit them because of how tough things are for them. I’m 64 and looking to retire, but I need to figure out what to do about this property.
I still owe $70,000 on it. How can I sell it to them considering their circumstances? I’ve only been charging them $1100 a month, but now I need to increase it to $1500 because of taxes going up.
Can you help me find a way to transfer the house to them while ensuring they won’t get kicked out? What are my tax implications if I sell it to them for $70,000 or any other amount just to let them have control and remove myself from the equation?
I don’t want my kids to have to worry about supporting their cousins once I’m no longer around. I’m not looking to profit from this situation, but I don’t want to make any tax mistakes either.
I only write off interest and expenses like taxes and insurance for this property. Can you provide any advice on how to navigate this tricky situation?
Thanks, Worried About Tomorrow
Response from THE MONEY MINDER:
Hello There,
I’m sorry to hear about the challenging situation you are facing with your family and the home you own. It’s commendable that you’ve been supporting your family in need and are now looking for a way to retire with your affairs in order.
Given the circumstances, one practical approach to selling the home to your family while ensuring they won’t be kicked out is to consider a rent-to-own agreement. This way, they can gradually purchase the property from you over time while living in it and you can slowly transition out of ownership. Additionally, you could consult with a real estate attorney to draw up a contract that outlines the terms and conditions of the agreement to protect both parties.
In terms of selling the house for a reduced price, such as the $70,000 you owe, it’s important to consider the financial implications for you. Selling the property at a lower price than its current market value could potentially result in a lower tax deduction for you. It would be beneficial to consult with a tax professional who can advise you on the best course of action to minimize any tax implications.
Furthermore, to address your concern about burdening your children with financial responsibilities in the future, you may want to consider setting up a trust or creating a plan for the future care of your family members with disabilities. This way, you can ensure their needs are taken care of while also relieving your children of any future financial obligations.
I hope these suggestions provide you with some guidance on how to navigate this situation. If you need further assistance or advice, feel free to reach out to a financial planner or estate planning attorney for additional support. All the best from THE MONEY MINDER in finding a solution that works for you and your family’s unique circumstances.
