ange: parents buying house and renting it to me?
my parents are considering buying a house and renting it to me. they don’t have a mortgage pmt b/c they paid their house off. i filed bankruptcy last year and i was wondering if this would help them with a tax deduction?
my rent would be what ever the mortgage pmt is. is there a way they could get a 100% financing, they have perfect credit
Answers and Views:
Answer by loanquest
Your parents will have tax deductions associated with the home they buy the same as they did with the home they paid for.
Yes it will. As long as there is a valid rental agreement between you and your parents, they may treat this like any other rental property, claiming expenses of maintenance, insurance, and other similar expenses against the rent income they receive from you. The IRS is more cautious about rental agreements between closely related persons, so insure that you keep this agreement above board, with a written lease and written evidence of your monthly payments to your parents. If the IRS suspects any sort of tax dodge occurring, your parents will be audited and the situation closely scrutinized for legality.Answer by financialpeas
Your parents must rent the house to you at fair market value, as they would to anyone else, or their deductions for the interest, insurance, depreciation, etc., could be denied. You mention bankruptcy in the same sentence with the question, so I will just say that your bankruptcy has no bearing on their write offs. Be sure to pay your rent on time, take good care of the property, and respect the helping hand your parents are extending to you. Good luck, and stay out of debt!Answer by Landlord
They will not get the same deduction if they lived in the house, mainly because they also have to include your rent as income and pay income tax on that amount. If you really want to make sure this is all fair for them, with no money out of their pockets, you should add 30% to the mortgage amount to cover their income tax.
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