Posted by Bill on June 30, 2002 at 10:40:44:
The first 500K of profit is tax free if they have lived in the house as their primary residence for 2 of the past 5 years.
Bill
Moving Elderly Parents Off a Mortgage - Posted by Michael
Posted by Michael on June 30, 2002 at 09:53:39:
Have elderly parents (72), maintaining a home (value $350k with a $100k mort.) in Hilton Head, SC who want me to buy the house and they rent it back. This will allow them to move the equity into the market and lower their asset base. They are healthy and will be in the house for next 8-10 years until they need to be moved into assisted care. I can do all the numbers and make the transaction work but want to know if and how much cap gain tax they would have to pay.
Re: Moving Elderly Parents Off a Mortgage - Posted by Dave T
Posted by Dave T on June 30, 2002 at 21:34:41:
Not sure I would advise this. Don’t know what you mean by “lower their asset base”. If you give them cash for the equity in their property, their net worth does not change.
I hope by “move the equity into the market” you weren’t thinking of the stock market. In today’s volatile and bearish stock market, putting cash which they may need in the mid-term into this market might be foolish and result unrecoverable losses. If your parents need income, they could consider a reverse mortgage.
A competent financial planner, well versed in estate planning, is probably the best person to turn to for the advice you and your parents need right now.