What If Mom & Dad Moved In With You?

I was asked by a friend recently if it was beneficial for them to sell their house and have their parents sell their home and then both of them pool their money and buy a home together. Their parents were getting older and they would like to be closer to them. So, let me give you an example of what the analysis we had to do and and kind of how we peeled this onion. Uh let's assume that the kids would sell their house and they would have a a half a million net. Let's assume the parents sold their house and they would have a half a million net. Let's assume the house that they wanted to buy is 1.3 million and the property has two homes on it, single story. So, that's a loan of $300,000. Now, a few things to consider. Prop 19. Remember, in California, if you're 55 plus, you could transfer your tax base. If you buy your house with your parents, does Prop 19 still take effect? And based on our analysis, it does as long as they are on title. Uh so, we think initially, yes, Prop 19 will take effect. So, the tax base will carry over from what the parents have. The second is ownership. Um obviously, the child's putting some money in, the parents are putting some in. Um but there's a third child. And so, it's not 50/50 ownership. So, how do you figure out that percentage? How does it break down based on what you're putting in? We had to analyze and come up with an equation of what that looked like based on how much money one child was putting and if they had to buy out the third child who did not live there, the third sibling, uh what that would look like.

For the right family, this could be an absolutely great solution. Um but you're going to need to figure out a few things. You're going to have to talk to a realtor, you're going to have to talk to a professional, a tax professional, and maybe even an estate planning attorney. Uh we you've got to make sure Prop 19's going to transfer and that the ownership is structured correctly from the beginning. Moral of the story is this. I think they had a great idea. And I think it was a great question. And I think a lot more people are facing this reality. Do we all sell our houses, buy one big house that's single story where our parents live with us, but in a separate home where it's easy for us to take care of them? What are the pros, the cons? If this is something you considered, let me know and I will actually show you how to break down the Prop 19 side, the ownership side, um and the buyout side if there's another sibling

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