jtiger12[at]yahoo.com (jtiger12) wrote:

- quote -

I don't know the values of property in Maryland, but just in
case you don't live in it for two years out of five before
you sell, or if it goes up in value more than you
contemplate, it's better to buy than to take it as a gift,
since your tax basis will be higher if you buy. Make sure
you make the purchase at fair market value to avoid
problems.

The way I usually structure things like this is to have the
seller finance the purchase by taking back a note and
mortgage or deed of trust. Charge the lowest allowable rate
under IRS guidelines (which change every month). To the
extent the payments are under $11,000 per year (or double
that if both of your grandparents are both alive or if you
are married, or $44,000 if both are true), your grandparents
can makes gifts to you and not take payments.

The drawback to this is that your grandparents will have
income tax on income they didn't take from you when they
forego any payment. But to the extent any payment you make
to them is interest on the debt, you can deduct it from your
own income taxes.

Stu

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"jtiger12" <jtiger12[at]yahoo.com> wrote:

- quote -

You should have little trouble finding good tax help with
this issue. You should start your search by talking to you
own tax advisor - perhaps he does this kind of work. If you
don't have an advisor of your own, ask your friends and work
colleagues who they recommend. You can also contact the
National Association of Enrolled Agents at www.naea.org and
do a search for an Enrolled Agent in your area who works in
this arena. I do not know if the AICPA has such a resource,
but you can find them at www.aicpa.org and search there.

You will also need an attorney to help with this, draft the
contract & note, and assist at settlement. I would suggest
you might want to discuss this situation with an estate
attorney to make sure you don't overlook any estate tax
implications or Medicare/Medicaid planning obstacles as you
progress.

As a caveat - unless you have a tax advisor of your own,
don't be too surprised if you cold call someone and find
that they can't meet with you until after 04/15. While most
any of us could help you, many of us will make sure our
regular, returning clients gets serviced first before we
take on a one time project.

Good luck,
Gene E. Utterback, EA

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I am starting to search for a CPA in Maryland that can give
us the best plan on purchasing my grandparents house. They
are in bad health, and I want to buy the house, and build a
one level addition that is wheelchair accesible. I plan to
live in the home, it is owned by them free and clear. Does
anyone have exp with this? I believe that even if they gift
the house to me, the fact that i will live there 2 out of 5
years will shelter me from capital gains when I sell, but
what about the increase on the original purchase amount? We
are thinkning about a wide range of creative financing,
ranging from a grant deed, and a refinance of the agreed
price, to creating a family loan, and paying them back
directly.

Any Free resources are appreciated, so I can have a good idea of what
to ask my tax professional when I find one..

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