As a parent ages, you may find that they have more expenses than they can handle. Purchasing your parent's house allows them to continue living in it while freeing up their income and possibly providing additional funds. Purchasing their place may also allow you to reap certain tax benefits, even if you don't live in the home. Before you purchase your parent's property, discuss sale conditions and possible financial consequences with your parent, a tax professional and an attorney.
Research the selling prices of similar homes in your parent's neighborhood. Your county's tax appraiser's office makes this information available to the public. Real estate professionals can provide a comparative market analysis, or CMA, and real estate websites can provide recent sale prices.
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Determine the remaining balance on your parent's mortgage. Your parent can contact the mortgage company for the payoff amount if his home has not already been paid for in full. They can also authorize your or someone else to contact their mortgage lender on their behalf.
Decide on a fair value of your parent's home based on the selling price of similar homes in her neighborhood. Take into considerations any upgrades or extra land attached to your parent's property. Hire a real estate appraiser to ensure that your estimate of the home's fair market value is correct. To avoid any gift or inheritance taxes, you must purchase the home at a fair market value. Talk to a tax professional if you need more information on the tax implications of the home purchase.
Secure financing through your bank or a mortgage company, if necessary. The lender will inform you of any paperwork or documentation needed to approve your home loan.
Pay your parent and the mortgage lender for the house. You and your parent will sign documentation like that used in a traditional house sale between unrelated parties. These documents legally transfer ownership of the home to you.
Draw up a lease if you are going to rent the home back to your parent. The lease should cover the rent amount if you charge rent. Include in the lease any provisions for that money, such as setting it aside to cover utilities, landscaping or housekeeping services for your aging parent.