I have the opportunity to purchase my parents house. I quit my position a year ago to take care of my Dad - he passed in July. I have had to use my savings to live the past two months but I do have money in an roll-over IRA. My problem is that since I haven't worked in the past six months the mortgage company will only accept an annuity (payment + 40% mo bills) for the payment or I can purchase the full house with my IRA. I am 57 so I will have to pay taxes and penalties if if take out my IRA which is a considerable amount. My parents house is valued around $50K. My question is does it make more sense to take the money out and guarantee a place for me to live the rest of my life at a lower rate or move to an apartment and live apartment poor. I have to sell the house so that the proceeds can be split between my siblings. I thought maybe I could rent, but they all want a lump sum of money. And help/thoughts would be appreciated.
Purchasing parents home
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jennypenny
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- Joined: Sun Jul 03, 2011 2:20 pm
Sorry about your dad...
If you haven't owned a home in the last two years (I think), you qualify for the first time homebuyer exemption. The first $10K wouldn't be subject to the penalty. If you've had any OOP medical expenses they used to qualify as an exemption also. And if you haven't worked the last six months your tax rate will be low this year so it's only the 10% penalty that's a problem. Getting as many exemptions to the penalty as possible might limit the tax hit.
I'm not sure whether you should or shouldn't. Is this where you live anyway? Can you get a job there? (do you need a job?)
If you haven't owned a home in the last two years (I think), you qualify for the first time homebuyer exemption. The first $10K wouldn't be subject to the penalty. If you've had any OOP medical expenses they used to qualify as an exemption also. And if you haven't worked the last six months your tax rate will be low this year so it's only the 10% penalty that's a problem. Getting as many exemptions to the penalty as possible might limit the tax hit.
I'm not sure whether you should or shouldn't. Is this where you live anyway? Can you get a job there? (do you need a job?)
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George the original one
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- Location: Wettest corner of Orygun
I think the sentimental attachment is part of it but I can keep my costs down by about $1000 a month (rent costs will be around $900 for an apt. vs. $500 for house) by purchasing the home. I currently live here and have been here for about 8 years now. I think for the first time in my life I want to settle down.
I don't currently have a job but am looking.
I will receive a small amount from the estate but not enough to puchase the home. It could be used for rental deposits and moving costs.
Another issue is if we sell on the open market we will need to make about $10K improvements in the house. I was going to take the house as is and make improvements the way I wanted the house to be.
I don't currently have a job but am looking.
I will receive a small amount from the estate but not enough to puchase the home. It could be used for rental deposits and moving costs.
Another issue is if we sell on the open market we will need to make about $10K improvements in the house. I was going to take the house as is and make improvements the way I wanted the house to be.
Supose you are with four: you have only to pay 3/4 x 50k = 37,5k ./. estate amount = the sum you have to pay to your siblings. Have it valued by a professional who also take in account that improvements are due. Then you will have later no difference of opinion with your siblings. Do not use a bank so no costs are involved. For taxation see above remarks. Take your chance as you have slept over it.