This is my first post on here. I have a couple rentals and bought my first one about 17 years ago. My question is, my parents are getting along in years and in poor health. We've moved them into one of our rentals closer to the city. They have a home about an hour away from me that they said they'd essentially give me. About 40k in equity. Their mortgage payment is $605 a month and it will rent for about $1100 a month. What is the best way of taking this property over? My parents have very little savings. Both were county empoyees and have decent helath insurance, but really nothing else. What should I do? Thanks in advance.
Ask them if they want to rent it out. If so, have them sign a property management contract for you (if that is legal for you in your state - in some states you have to be a broker in order to manage property for a third party). Rent the property out. Give them the proceeds, continue to have them pay their mortgage from the rent proceeds.
Hopefully they will live a good, long life and this situation continues for many years.
However, when the inevitable happens, the house will be disposed of according to their will. If that includes ownership for you, you will inherit the house with a stepped up basis on the day of the last survivor's death. This has no tax impact to you and if you sell the house right away, you do so with no capital gains taxes. If you opt to keep the house, your basis is stepped up so that future gains are not so high as if you had taken over your parents' basis.
Thank you very much. I think my main question was how to protect it from medicaid or if they go into a nursing home? Will the government take their house?