Buy Parent's Pre-Foreclosure

6 Replies

I need help understanding the tax consequences of buying my parent's house pre-foreclosed home.  As far as deals go, it is an excellent deal for me.  I just don't know if there are additional tax complications since direct family members are involved.  Does anyone have any experience with this at all?  I'd like to save them from being foreclosed on as well as make a little money for myself.  The home is in Texas.

I don't have an answer on the tax question and don't want to sound too harsh but if you have the ability to buy the house why don't you just help them get current on their mortgage?

in a similar situation bumping for answers.


I'm an accountant in terms of your tax liability you'll be stuck with the property taxes due to local government however on a Federal level you can apply these mortgages to as a tax credit.

if you're going to own multiple properties you may want to start a LLC.

There are no abnormal tax implications for you. If they are doing a short sale, there could be some for them.

@Paul Bowers It is just my father in the home and he no longer wants to be in there.  The home is way to big for a single guy.  He is already out and in an apartment.

I have been reading that there are all kinds of issues with purchasing the home for the remainder of the mortgage as it is well under the current market value of the home.  I know that if this was a home wasn't a family member we could subject-to or buy out.  I'm seeking guidance on special tax circumstances or a contact who I can to talk to.

Originally posted by @Wayne Brooks :

There are no abnormal tax implications for you. If they are doing a short sale, there could be some for them.

 ...although you won't be doing any short sale to buy your own family's home.

Originally posted by @Matthew Foucheaux :

@Paul Bowers It is just my father in the home and he no longer wants to be in there.  The home is way to big for a single guy.  He is already out and in an apartment.

I have been reading that there are all kinds of issues with purchasing the home for the remainder of the mortgage as it is well under the current market value of the home.  I know that if this was a home wasn't a family member we could subject-to or buy out.  I'm seeking guidance on special tax circumstances or a contact who I can to talk to.

 your question is best suited for a CPA. That said, you could potentially just step in as your father with all of the rights of the borrower without any of the liability. Read the new rules with the CFPB related to successor in interest. Take title to the property, call it your own and get it current. Lender can't accelerate the note if you are a legitimate successor in interest. Make sure you document the transfer between parent/child. 

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