Do we pay rent to son and DIL?

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M

Margaret51 Asked December 2020

Do we pay rent to son and DIL?

We are planning to retire soon and move to a CCRC. We were planning to put our home on the market, but our son and DIL have told us that they want to purchase the house. They have been living with us for 9 of their 10 years of marriage, rent-free. If we sell them our house and continue to live here for several months while awaiting our place at the CCRC, should we pay them rent? (I say no, my husband is non-committal--he was the one who refused to ask them to pay rent all this time)
Another question: If we sell them the house at below market value (just enough to pay off the mortgage), will they have to claim the difference as a "gift" from us to them on their income tax? It could be as much as $20K difference, depending on an updated assessment.

Financial Planning Multi-generational Living Relationships

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score 1 · Answer 1

I vote for zero rent to them and selling at fair market value. There’s been enough unfairness already

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score 2 · Answer 2

Just FYI for those talking about Medicaid—the OP is moving to a CCRC or continued care residential community. So they aren’t going to need Medicaid for LTC. They are literally paying for a long term care plan here as a CCRC will take care of their needs from IL to skilled nursing. CCRCs provide multiple levels of care. They will probably start out in IL and move to other care levels as the years go by.

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I think my brain skipped right past that part 😂

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score 1 · Answer 3

You need to sell them the home at market value. Otherwise, yes, you are gifting that amount.
Check with a lawyer. This is something you cannot afford to be wrong about, so taking the word of any of us on a Forum wouldn't be wise.
As to whether you pay rent to them or not, how about not selling it to them until you are happily settled. The question then is settled. I believe that they are good and decent people who would never dream of asking you for rent given the circumstances. Am I wrong in that belief?

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score 0 · Answer 4

I think you need to be asking your son about this. It’s actually he & His wife’s decision not yours. It’s up them if they want to let you live there rent free. It’s up you whether your want to stay & pay rent if that’s what they decide.

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score 1 · Answer 5

If there is any chance that either you or your husband would need to qualify for Medicaid in the next five years, please do not sell the house for less than market value.

If the CCRC is your long term care plan and you will never need the help of the Medicaid program for a nursing home stay.....nevermind.

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score 0 · Answer 6

Do you have other children?

This sort of financial question will get better answers at www.bogleheads.org.

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score 2 · Answer 7

If you think of this as only a real estate question then I vote that you don't owe them any rent, tit for tat. However I think that even a relatively young and healthy senior needs to make plans with the possibility of needing long term care in mind, anyone can be hit with a sudden catastrophic injury or illness and find themselves in need of expensive care, and everything you do within 5 years of needing that care will be scrutinized if you find yourself in need of medicaid. Now is the time to speak with an elder law attorney to get all of your affairs in order - POAs, MPOAs, trusts and medicaid planning.

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Do we pay rent to son and DIL?

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