Renting to Mom - Tax Strategy
Mom is getting older and it likely makes sense for her to move out of her house. She is retired and her income is low. I'm exploring the possibility of buying a house and "renting" to her. Trying to figure out the best overall strategy for this. Primary considerations:
- Repositioning assets to allow her to potentially qualify for Medicaid in the future, if needed (considering annuitizing portion of lump sum cash she'll receive from sale of her house to make future "rent" payments).
- Avoiding taxes to the extent possible (considering having her "gift" me the rent and then just use that money to pay the mortgage - which appears to avoid loaning her money, avoid the need to claim rental income, etc.). I'm not looking to make money on my mother, so I wouldn't care to have her gift the exact amount of the PITI mortgage payment.
I will consult with a CPA and attorney for personalized advice, but just curious if I'm thinking about this the right way or if there's something I'm missing that may have adverse tax consequences (for example, not being able to deduct mortgage interest if the "rent" money received is gifted, etc.)