Paying off my parents mortgage?

[captZEEbo]

[ QUOTE ]
The house is only worth $150K right now if they sold it. I think there is $35Kish left on the mortgage.

[/ QUOTE ]are you sure you'll be dealing with an estate tax? If they are living in a $150k house, I think they might not have a big enough estate to tax. Assuming you're talking about the US estate tax...
"The applicable exclusion amount increases to $2,000,000 for decedents dying in the years 2006, 2007 and 2008. The amount increases to $3,500,000 for 2009"

[punkass]

Pay off the mortgage. You will have to file a gift tax form (I forget what it is), that states you went over $11k by whatever. Since your parents' estate comes no where near the $1.5 or $2M or whatever it might be when they die, you owe no estate taxes.

[fiskebent]

Why not buy the mortgage from the bank? Then your parents owe you 35K. While they live they don't pay anything on the loan but when they die, you get your 35K back. Then you only get the remaining 115K as inheritance.

I don't know if this is feasible. I know nothing about US laws. I don't live there.

[offTopic]

I don't know what your particular situation is, but I did something similar with my parents. They had a small mortgage on the house I was living in (I was paying the property tax every year as "rent") and had taken a home equity loan to build the place they were living in.

We consolidated both loans, refinanced, and put me on the title for the house. I have been paying that loan down ever since, leaving my parents to pay some amount of property tax every year on their place. It's worked out pretty well...I've been getting a tax break, and my folks have been taking in more than they spend between retirement distributions and my dad's pension.

[ericd]

Go see an attorney who specializes in Trusts and Estates. The advice you receive here can be suspect. For example, in 2006 11K was increased to 12k.

A trust can be set up to transfer ownership to you and/or your siblings. It has to exists for some number of years (5?) to get all the tax benefits.

Also, there is something about reducing your parents net worth below $???? for them to receive the maximum health benefits. If above $???? they have to pay some expenses out of pocket.

There is a lot more to this and the laws often change. So, do yourself a favor and find a good trust and estates attorney.

[JPinAZ]

If you're worried about the yearly gift exclusion, why not just pay the max this year & then pay the rest in January.

[By-Tor]

Didn't we do this a year ago?

[adanthar]

Disclaimer: I am a lawyer but know nothing about trusts and estates, take my advice at your own risk, blah blah blah go see somebody who actually practices this because it's so ridiculously boring

[ QUOTE ]
If you're worried about the yearly gift exclusion, why not just pay the max this year & then pay the rest in January.

[/ QUOTE ]

Since the total amount involved is 35K, this is probably the best way to go about it. I'd tell you to talk to a couple of lawyers if this was for 500K, but since the whole thing fits into three gift exceptions, it isn't really worth it. I am sure that there are ways to structure this transaction that makes both you and your parents some kind of profit over and above that, but a)I know nothing about them and b)my hunch is that the lawyer fees would eat it.

To be sure they cash them all, send them two checks in mid December and one in early January so they don't have too much time to change their minds.

[TMTTR]

[ QUOTE ]
The house is only worth $150K right now if they sold it. I think there is $35Kish left on the mortgage.

[/ QUOTE ]

There is no estate tax when they die on a house worth $150K unless they also have a couple of million stashed away for you as well -- and if they have a couple of million stashed away for you, they certainly don't need you to pay their mortgage off for them.

If you are over 18 and still living at home, I would suggest that you tell them that you want to pay your own way, i.e., you want to pay rent (and for your share of the food). You can then give them money every month in a way that many parents will accept and actual think is responsible. This may have some tax implications for them, but only if they claim it as income (probably unnecessary).

[By-Tor]

[ QUOTE ]
Didn't we do this a year ago?

[/ QUOTE ]

Sure enough....