I'm planning to invest in buying a home with my parents. I need the best tax advise possible for tax benefits.

Answer 1

You need to talk to two or possibly three people. No one here can help you without very specific knowledge of your state of residence, property rules within the state, age of parents, their health, legal issues of all the parties such as divorce or business ownership, Medicare benefit status and so forth.

You need to talk with a CPA, an attorney specialized in knowledge of Medicare rules and a good property law attorney. For a few hundred dollars you could save yourself tens of thousands of dollars. Imagine you slide on ice and hit someone and they sue and take the house and your parents have no home. Imagine your parents become ill unexpectedly and a lien for their medical care is on the house and so forth. Likewise, there are estate and income tax issues of ownership of property not by spouses. As a rule parents and children shouldn't own joint property without taking substantial legal precautions.

Further, since your parents are married, marital property rules apply. In my state, a debt by a spouse is not a debt to the other spouse. Go one state over and a debt by a spouse is a debt by the other spouse. However, in my state, a medical debt by one spouse is a medical debt by the other.

Medicare has rules on property transfers that if you take advantage of, protects the property from seizure by the United States at death. Fail to follow the rules and your ownership interest vanishes. If push comes to shove, the government wins.

Estate tax law can be quirky when non-spouses own property.

Finally, you could die unexpectedly and trigger weird intestacy issues. There was a famous case, about two decades ago, of parents who gave all their money to their child, millions of dollars worth. He died in an accident without a will. The state passed 100% of the estate, which really was the parents money, to his small minor child who was then in the custody of the ex-wife. As guardian of the minor, she was permitted to use the money in any way she saw fit and cut the parents off completely.

We cannot help you here.

Answer 2

The problem with multiple generations buying property is that creditors of any involved person can come after the property. Consult an attorney before doing anything.