jbdrayton[at]insightbb.com says...

- quote -

First, let's clear up some of your terms. If they are paying
rent to you, they are not paying the mortgage. If you buy
the condo, you may rent it to your parents. There is a good
chance that the mortgage will be at a higher rate than for a
personal residence. The rent your parents would pay will
likely have to be reported on Schedule E of your tax return.
Then you may deduct the related expenses such as taxes,
utilities, mortgage interest (NOT the payment), and
depreciation. There is a catch. If the rent you charge your
parents is less than market value, then the amount of
expenses you may take would be limited to the rent (that is,
you can't declare a loss from the activity).

Of course, you may charge as little in rent as you want if
your parents can't afford the market value. You should be
prepared to pay higher taxes each year plus ongoing
maintenence, etc. Look carefully at the potential negative
cash flow. This is an area in which I have experience. If
you have any siblings, would they be willing to partner with
you on the purchase? If the difference between what your
parents pay you and the amount you must pay for the
mortgage, taxes, etc gets too wide, would your siblings be
willing to help?

Gary

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I am trying to move my parents to Kentucky from Florida.
They are 80 and 83 yrs old. They have about 75,000 equity
in a place in Florida, and do not want to purchase real
estate again ... and they may need to use the 75,000 for
living expenses. I have about 30,000 to invest, and am
considering putting that down on a condo for them and
letting them pay me an amount equal to the mortgage payments
and taxes. Is this the best way to handle this, or will I
find myself in a bad tax situation? I do not want them to
rent from someone else, renting from me would be like having
their own place and they have had their own place for 60
years. Should they be co-owners? Or what? Any suggestions
would be appreciated.

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