Home Buying Strategies for Buying a Home for Your Parents
If your parents are busy enjoying retirement but are still living in the same home that you've always lived in you might decide that it is time to help them move into a new home. The older house might be too difficult to maintain, might be in an inconvenient location or your parents may simply want to free up more money. There are several ways you can go about this.
1. Purchasing the Home
One approach is to purchase the home outright. If you have the funds necessary to do so, you may save more money in the long-run. You may also choose to sell the property once your parents no longer need it. Offspring will sometimes purchase a vacation home that their parents will live in. The home can continue to serve as a vacation home after your parents move out.
2. Charging Rent
If you are considering purchasing an investment property, another option is to allow your parents to remain on the property for free as a tenant. When your parents no longer need the property, you may rent it out to a tenant to generate a profit.
One downside of not charging rent or only charging a low rent is that you will have to pay higher taxes on your property. If you charge your parents the market rate for the property, it will not be considered for personal use for tax purposes. You could reduce taxes by claiming your parents as dependants. They will need to make a certain income and you will need to pay more than half of the support costs.
3. Co-Signing with Your Parents
If you cannot afford to purchase a home outright, you might instead choose to co-sign for a loan with your parents. This is ideal if your parents have the funds to pay for the home. Many lenders are unwilling to lend to those who are older, but they will write a loan if you co-sign. You'll be responsible for the loan in the long-term, though, and will have to decide what to do with the mortgage when your parents are no longer living in the home.
Regardless of what you choose, the home will be an investment in one way or another. For this reason, it's important to speak with a real estate agent if you want to find a good home for your parents and find a great deal.