Re: need help with buying house from parents - Posted by Jim Locker
Posted by Jim Locker on January 16, 2001 at 19:50:54:
If you aren’t careful, you could incur some tax liabilities from the IRS with this kind of transfer. The IRS could take the position that the equity in the property was a gift to you, and tax you on the taxable portion of that. Your mother can give you $10K in a year, and your father can give you $10K in a year tax free, totalling $20K. Equity beyond that level could be taxable.
The other major risk you run - especially since you say that your mother has a long term illness - is that medicaire/medicaid will come after your parent’s assets to cover medical expenses. They will chase the house, and if your parents deed it to you, they will come after you. It is very common for ailing parents to transfer assets to children in order to become destitute and be eligible for government funded medical care, and the government is wise to this trick.
Deeding it to a land trust will obscure your ownership of the property. This gets into an area where I am not particularly competent, but it seems to me you might want to remove ownership one or two steps from yourself to protect yourself from medicaire/medicaid.
Someone stop me if this won’t work, but why not place the house in a land trust, with a corporation as the beneficiary, and you as the owner of the corporation? Keep in mind that there is an excellent chance that the government WILL come after the house.