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Evelyn Educates Group

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Caleb Reyes
Caleb Reyes

Will Anyone Buy Me A House

HOWSON: At first, I was skeptical. I was like, so you are telling me that if I want the house, you guys are just going to buy it for me, and I'm going to pay you back? He's like, yeah. I mean, you find a house, you put in the offer, and then we buy it, and we sell it back to you.

will anyone buy me a house

ARNOLD: And the companies have another guardrail in all this - they don't let you offer more than they think the house is worth. Shaival Shah is the founder and CEO of Ribbon home, another cash offer company.

SHAIVAL SHAH: We have models and algorithms running in the background that will predict the value of the house. So same day, everything is fully approved, ready to make a cash offer. So it's really, really, really fast.

Someone who decides to gift a house in this way needs to understand this. The new owners could make changes that the purchaser does not approve of or allow the property to fall into disrepair, and have every right to do so. If the giver wants to maintain some control of the property, making an outright gift may not be the wisest choice.

Most people will not reach the lifetime exclusion amount unless they can afford to gift several grandchildren with cars, college tuition, and houses. But filing additional tax returns can be a nuisance and is something they need to know about and be prepared to do.

The borrower can keep their name on the house and let their loved one live there. Their name stays on the deed, so they keep their rights as owners of the property. They can make any improvements or changes they wish, and decide to sell it if they want to. It also means they can continue to take the tax breaks for the mortgage interest and property taxes.

A third option when buying a home for someone else to live in is to share ownership and split the rights and responsibilities. By co-signing on a mortgage, both names will be on the deed. This can be in an equal 50/50 split or some other agreed-upon percentage. This can work for some people but has its drawbacks.

Gifting only the downpayment for a property can give the occupant the financial boost they need to get a house, without getting involved in its ownership. If the amount of the downpayment is below the IRS threshold, the giver may even be able to avoid having to claim the gift on their tax return.

The owner of a property can give gifts that gradually give the occupant ownership. For example, a parent could give their child a 5% interest in a house each year until the child owns 100%. This keeps the parent in control of the property and the mortgage until the halfway point when the child owns the majority interest.

But if only a nominal amount of rent is charged, the IRS will consider the house a personal use asset, and any landlord benefits will not apply. Charging below the market rate, or allowing someone to live rent-free also ends up counting as a gift, and Form 709 must be filed.

One way that a person can live rent-free is to claim them as a dependent. The IRS will only allow this if the homeowner is also responsible for at least half of their living expenses. This is an extreme solution with a lot of legal and financial ramifications, but it might be a practical option for an elderly or disabled relative. It should not be considered without first seeking the advice of an attorney.

Also, under current law (2022) you can gift a total of $12.06 million over your lifetime without incurring a gift tax. If your residence is worth less than $12.06 million, you likely won't have to pay any gift taxes, but you will still have to file a gift tax form.

While you may not have to pay gift taxes on the gift, if your children sell the house right away, they may be facing steep taxes. The reason is that when you give away your property, the tax basis (or the original cost) of the property for the giver becomes the tax basis for the recipient.

For example, suppose you bought the house years ago for $150,000 and it is now worth $350,000. If you give your house to your children, the tax basis will be $150,000. If the children sell the house, they will have to pay capital gains taxes on the difference between $150,000 and the selling price.

The only way for your children to avoid the taxes is for them to live in the house for at least two years before selling it. In that case, they can exclude up to $250,000 ($500,000 for a couple) of their capital gains from taxes.

Beyond the tax consequences, gifting a house to children can affect your eligibility for Medicaid coverage of long-term care. There are other options for giving your house to your children, including putting it in a trust or selling it to them.

We need to plan for the possibility that we will become unable to make our own medical decisions. This may take the form of a health care proxy, a medical directive, a living will, or a combination of these.

Both of our parents are homeowners (my parents are divorced, my partner's aren't). His parents are close to paying off their home that they've lived in for many years. I'm not sure of my dad's situation, but my mom and her husband rented for years and just bought a house right before we did. I think we both did grow up thinking homeownership was important, probably me more so than my partner. I like stability, so the thought of renting for life is somewhat terrifying. I can't wait until our house is paid off and we can live mortgage-free. I would love to have a place to store my stuff or rent out that would allow me to live a bit more of a vagabond lifestyle.

I feel terrified to own a house. I really have no idea how to do a lot of things like fix things, mow a lawn, etc. I have been lucky to live in apartments where maintenance has always been available for those things. I realized as I looked at houses how heavy the decision felt. Like, if I screwed it up I would be stuck with a house I hate for 10 years (my parents don't believe in selling a house after a couple of years just to move). I couldn't decide what type of neighborhood or what area of town, and I worried about commuting constantly (a problem in a city where nearly everything is about 20 minutes away or more). I'm scared that I have too much responsibility and I have no idea how to do it.

I also feel guilty because my family's relative wealth is the only thing enabling me to buy a house. I have a bit of money saved (a couple thousand), which is more than most of my friends my age...but nowhere near enough to buy a house. I am well aware that most of my friends and peers will not be able to buy a house and definitely not one as expensive as mine any time in the near future. So I feel bad for complaining about stuff to them. I wish other people (especially older generations) would understand that I shouldn't have to feel this much guilt and fear over something that should be considered a normal step in growing up. My dad owned his first house right out of college. And his parents were definitely not rich. I wish other people would look at how hard millennials are working just to break even; moving in with their parents, delaying having kids, working three jobs, paying off mountains of student loan debt. We're doing all the things you guys told us we had to do! And the economy still sucks, and we still can't find jobs.

I grew up in the largest suburb of Minneapolis. For the first 10 years of my life, I lived in the house my dad owns. My parents split up, and, for financial reasons, we had to move in with my mom's parents. We lived in their house for the rest of my childhood. I grew up assuming I would eventually own a house, and as I got older, I realized it was actually something I wanted regardless of society's expectations. Living in an apartment was an uncomfortable experience for me, because I never truly felt like the space was mine. I think being from a suburb where most people owned their homes had a big impact on my expectations. I'm sure being white has had a huge impact, one that I was never aware of growing up.

I love owning a house. It comes with its own anxieties, and I can see how it's not for everyone! I am very handy and I love doing things myself. I replaced my own gas-powered water heater! It's magical, for me, to have this space that truly feels like my own, which is something I don't know that I ever felt growing up. I can paint it and hang whatever I want on the walls. I don't have to worry about disturbing neighboring apartments (although houses on my block are close together, so I do still try to be considerate). I have outdoor space, too, including a garden and a firepit. I suppose it can be a little scary when something goes wrong, but taking care of various issues makes me feel empowered and capable.

Also, the city offered a $10,000 interest-free loan for qualifying buyers. It worked really well for us as first-time homebuyers. In order to receive assistance from the city, we had to attend four classes that covered topics such as credit, house maintenance, and how to take out a mortgage. In October 2017, we toured a few homes that this program was working on and stumbled across our future home. They had just bought the house, so it looked honestly horrible when we first toured it. But we saw the potential and were able to put a deposit on the property. Getting in that early was great because we got a lot of say in the renovation process. So, by the time they were done with the house, they sold it to us for $120,000. We were able to get a mortgage, along with the $10,000 loan from the city. This program is so that you only pay a 3% down payment, so we ended up paying somewhere around $4,000 for our down payment. And since we had an idea of all of these costs in October, by the time that March came around we had saved that money. Our mortgage is now $675/month, which is $200 cheaper than our two-bedroom apartment! We now have a gorgeous four-bedroom home that was built in 1890 but has all-new renovations. And, even better, we can be part of a program that is helping to rehabilitate our community. 041b061a72


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