dpb <none[at]non.net> wrote:

- quote -

Right - because with a reverse mortgage any payment you get is really
a loan, so it's non-taxable.

- quote -

One thing that OP can do to preserve some of the step-up in basis is
to purchase the house from the parent at current market value. The
note would be set up so that payments would amount to $13,000 per
year per buyer, or less. Parent can then foregive the payments, and
foregive any balance when he dies.

The downside of this is that either the parent or child will have to
recognize income with respect to the [imputed] interest on the
purchase price.

Stu

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Stuart A. Bronstein wrote:
....
- quote -

From Pub 554 that seems to be so. I've not investigated more
thoroughly than the one section there nor looked back to underlying
rules/law so caution still advised.

....

- quote -

In a situation such as posed by OP, the son may be willing altho there's
again the loss of any basis step-up on down the road. And, of course,
there's certainly less of a guarantee to the parent(s) if something goes
wrong in the financial standing of the son that can't continue to make
payments so would seem from their standpoint would want him to make
whatever arrangements required for the buyout independent of them.

All in all, somebody local w/ knowledge of the overall situation and
objectives and the right experience in elder planning, etc., still seems
OP's best bet to me.

--

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dpb <none[at]non.net> wrote:
- quote -

Are payments not taxable for a reverse mortgage? I hadn't heard that,
and if it's true it's one of the few benefits of having one. Most of
the reverse mortgages I've seen are not financially good deals, though
they are appropriate for some people under some circumstances.

Instead of a reverse mortgage what I've done in a few cases is to
retain a life estate and sell the remainder interest. You can probably
get more money than with a reverse mortgage. If you can find someone
to buy the remainder interest, that is.

Stu

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DF2 wrote:
- quote -

As was I; the question would be whether it can be structured as a valid
reverse mortgage to ensure payments aren't taxable, etc., ...

I didn't see anything in a _very_ quick perusal of IRS Pub's that would
seem to prohibit it, but...

--

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In misc.taxes.moderated, dpb wrote:

- quote -

I agree. It would not be a HUD or FHA reverse mortgage, but I think
a bank would probably let you borrow out a lot of equity given these
facts. I would talk to some smaller banks regarding this. As long
as you are planning on borrowing less than 50% of the equity, I
would see this as attractive to a prudent banker. But I am just
speculating.

- quote -

Some do this to sequester assets from means testing.... :-(

- quote -

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kmcross[at]gmail.com wrote:
- quote -


- quote -

For commercial products or insured...is that mandatory if it were
privately financed (ie, you)?

I don't know, the concept was what struck me, too, as the way as
otherwise taxwise seems wisest to take advantage of the step up in basis.

Other than that, session w/ qualified elder planning counselor would
seem probably to be worthwhile investment.

--

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On Feb 28, 3:31*pm, PeterL <po.n...[at]gmail.com> wrote:
- quote -

Yes, you have to be living in the home - it's currently rented.

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On Feb 28, 2:55*pm, "kmcr...[at]gmail.com" <kmcr...[at]gmail.com> wrote:
- quote -


You can accomplish that without a transfer of title. Checked into
reverse mortgage?

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On Feb 28, 10:50*am, "Stuart A. Bronstein" <spamt...[at]lexregia.comwrote:
- quote -

We'd like to get some of the equity in the house out, since we are
helping to support our parents - all their $ is in the house and they
live basically on SS and pension income - which is not enough. House
has been rented fro the last year.

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"kmcross[at]gmail.com" <kmcross[at]gmail.com> wrote:

- quote -

property could increase either their or your income tax and/or estate
tax.

Stu

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<kmcross[at]gmail.com> wrote in message
news:0752a4a4-1e4d-41da-ab7d-4986004654fb[at]s38g2000prg.googlegroups.com...
- quote -



What are you trying to accomplish (qualify parents for property tax
reduction or Medicaid, give children control of property, etc)?

If the children wait to inherit the property, they will get a stepped up
basis and save taxes in the long run.

Was the property the primary residence of the parents before it was rented?
If so when?



--
2:34pm 2/28/09
Charles M. Shanes, CPA
Charles M. Shanes CPA, LLC
Richmond, VA
QuickBooks ProAdvisor
Microsoft MPAN Member for SBA
www.shanescpa.com
cshanes[at]-Delete-This-Nospam-shanescpa.com

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

We're trying to figure out a way to transfer the title of my parents
home to their children with minimal tax consequences. My parents are
both elderly and have lived in the US for 40+ years, but have remained
non-US citizens with permanent green cards. They don't currently live
in the house - it's rented. We handle all their affairs - and want to
take ownership of the house and have legal title - but are not sure
what the tax consequences will be. It's worth about $500,000. Could
a trust be set up? Would that help?

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