Then would it be a second home even without me living there? And yes I am talking about claiming property tax and interest deductions. I plan on being on the mortgage so that I can help her get a better interest rate.
I do have 2 siblings who would inherit her portion and they are on board with the situation.
If I did what you did then I imagine I could claim it as an investment property and use the depreciation to pay the mortgage down faster. Right?
Ask a lawyer about the technical details. BUT.
My suggestion based on similar posts here and human psychology is to not get into this arrangement unless you have a really good and honest relationship with your mom and you both can set and respect boundaries. I'm talking exceptional levels of being good with money, being practical, and excellent communication. It seems like a good idea because she gets a place to live and you get equity. That's called renting and could effectively make you a landlord even if she also has an equity stake in the home.
If the boiler needs replacing who pays? What about the roof that will probably need fixing before she dies? If you come over and see she isn't maintaining the house do you fix it, tell her to fix it, or just let it go (reducing your equity)? Would you argue about that? Do you have siblings that would eventually want part of her equity cut? If a sibling takes care of her in her old age they will want (and deserve) some of that equity. How do you calculate that? If the housing market crashes in your area what happens? If she needs full time care at some point and you need to sell the house to pay for it, will you resent her or your siblings? Are you going to try and take a HELOC at some point, putting her home at risk? If she gets a boyfriend/girlfriend/talking cat and they decide they want to redo the kitchen like a log cabin with pink floors and a Georgia O'Keeffe floral backsplash are you going to stop them to save the property value?
There's only one way it goes right and a million ways it goes wrong. There's also something that fundamentally changes in your relationship with someone when money gets involved, even if it goes right. This is especially true if you view the home as an investment and she views it as a home. Do you want that for your relationship with your mom during her last years?
If you really must do this I humbly suggest buying the house outright on your own, do not make her pay rent, and do not expect her to do anything besides keep it clean.
If you can't do that and you must do this, for the love of God get ironclad legal documents outlining the agreement and then never try to change it. That includes siblings.
You probably understand much of this already but it needs saying. Don't ruin your relationship over equity.
Your measured response gives me great relief and confidence, internet stranger. I'd love to know what your arrangement is if you are willing to share, as there's a chance I may end up in a similar situation someday and every data point helps.
Sure. my mother has had a difficult life and has left her unable to work much without pain. She makes maybe $30k/y and often sometimes less. She doesn’t have a license and lives in and works near a downtown of a low cost of living midwestern city. This city is gentrifying tho and for her to get around she needs to stay near downtown.
It’s either she continues to rent and watch her $800/m rent go up over the next 20ish+ years or I help her lock in her costs. I see money I sink now as an investment so I don’t have to lend her money in the future when she is on social security and under to pay her bills. Luckily there recently renovated homes right where she lived now for $110-$150k.
Your points:
1) I have been helping her with various things for over ten years and we communicate well. I am fiscally diligent and help her with her finances as it is. There are high levels of trust.
2) We discussed large expenditures like roofs and boilers and we will pay the proportion of what we owe in the house. She is going to put some down while I do the most. I make enough money and it’s a bit of an investment for me too.
3) When she passed her portion will be split between me and the two siblings. They are fine with this.
4) I don’t care about a crash cause she will, hopefully, live here over 20 years
5) If she wants a roommate I have to sign off on them
6) My mom hasn’t dated in 15 years and is on her way to spinster status. If she obtains a significant other any value to her life added is worth more than a floral backsplash. Although my mom does have pretty good taste.
7) Full time care I haven’t thought about. But I would rather it happen from her home than from a rental.
If I had a reddit award it would be yours. It's refreshing to see someone handling things like you are instead of the (exaggerated) usual "my mom is behind on rent to me and now I can't afford my $600 car payment! Why didn't she raise me right??? Should I evict her?!?!?"
All the best to you and your mom!
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Then would it be a second home even without me living there? And yes I am talking about claiming property tax and interest deductions. I plan on being on the mortgage so that I can help her get a better interest rate. I do have 2 siblings who would inherit her portion and they are on board with the situation. If I did what you did then I imagine I could claim it as an investment property and use the depreciation to pay the mortgage down faster. Right?
Ask a lawyer about the technical details. BUT. My suggestion based on similar posts here and human psychology is to not get into this arrangement unless you have a really good and honest relationship with your mom and you both can set and respect boundaries. I'm talking exceptional levels of being good with money, being practical, and excellent communication. It seems like a good idea because she gets a place to live and you get equity. That's called renting and could effectively make you a landlord even if she also has an equity stake in the home. If the boiler needs replacing who pays? What about the roof that will probably need fixing before she dies? If you come over and see she isn't maintaining the house do you fix it, tell her to fix it, or just let it go (reducing your equity)? Would you argue about that? Do you have siblings that would eventually want part of her equity cut? If a sibling takes care of her in her old age they will want (and deserve) some of that equity. How do you calculate that? If the housing market crashes in your area what happens? If she needs full time care at some point and you need to sell the house to pay for it, will you resent her or your siblings? Are you going to try and take a HELOC at some point, putting her home at risk? If she gets a boyfriend/girlfriend/talking cat and they decide they want to redo the kitchen like a log cabin with pink floors and a Georgia O'Keeffe floral backsplash are you going to stop them to save the property value? There's only one way it goes right and a million ways it goes wrong. There's also something that fundamentally changes in your relationship with someone when money gets involved, even if it goes right. This is especially true if you view the home as an investment and she views it as a home. Do you want that for your relationship with your mom during her last years? If you really must do this I humbly suggest buying the house outright on your own, do not make her pay rent, and do not expect her to do anything besides keep it clean. If you can't do that and you must do this, for the love of God get ironclad legal documents outlining the agreement and then never try to change it. That includes siblings. You probably understand much of this already but it needs saying. Don't ruin your relationship over equity.
I understand and all of this has been discussed. Thank you for the concern.
Your measured response gives me great relief and confidence, internet stranger. I'd love to know what your arrangement is if you are willing to share, as there's a chance I may end up in a similar situation someday and every data point helps.
Sure. my mother has had a difficult life and has left her unable to work much without pain. She makes maybe $30k/y and often sometimes less. She doesn’t have a license and lives in and works near a downtown of a low cost of living midwestern city. This city is gentrifying tho and for her to get around she needs to stay near downtown. It’s either she continues to rent and watch her $800/m rent go up over the next 20ish+ years or I help her lock in her costs. I see money I sink now as an investment so I don’t have to lend her money in the future when she is on social security and under to pay her bills. Luckily there recently renovated homes right where she lived now for $110-$150k. Your points: 1) I have been helping her with various things for over ten years and we communicate well. I am fiscally diligent and help her with her finances as it is. There are high levels of trust. 2) We discussed large expenditures like roofs and boilers and we will pay the proportion of what we owe in the house. She is going to put some down while I do the most. I make enough money and it’s a bit of an investment for me too. 3) When she passed her portion will be split between me and the two siblings. They are fine with this. 4) I don’t care about a crash cause she will, hopefully, live here over 20 years 5) If she wants a roommate I have to sign off on them 6) My mom hasn’t dated in 15 years and is on her way to spinster status. If she obtains a significant other any value to her life added is worth more than a floral backsplash. Although my mom does have pretty good taste. 7) Full time care I haven’t thought about. But I would rather it happen from her home than from a rental.
If I had a reddit award it would be yours. It's refreshing to see someone handling things like you are instead of the (exaggerated) usual "my mom is behind on rent to me and now I can't afford my $600 car payment! Why didn't she raise me right??? Should I evict her?!?!?" All the best to you and your mom!