When you must decide on what is a good plan of action which involves a housing arrangement outside the norm, it can be confusing and difficult to determine whether it is a good deal or not. That is the question that one reader has:
I have a financial question and hope you wouldn’t mind answering it for me. Here is the situation; My parents are building me a house with their own money on a 5 acre location, next door to their 5 acre location. I picked the design of the house that is being built and will rent it from my parents for $800 a month over 30 years. My parents will continue to have title of the house and land and pay all the annual taxes. All my parents properties are held in an estate to be shared with my only brother. Upon my parents deaths, the estate is set up so that my brother will get my parents house and 5 acres and I will get the house that I picked and am building on the other 5 acres. (This arrangement was made so I would move back to live near my parents, and they would live near their grandkids and I can help them stay in their home as they age). I am financially secure with a good job and credit. Both my husband and I are professionals in the work place and could easily buy a nice 3 bedroom home in a neighborhood if financially more desirable to do so.)
My question is this, is this arrangement with my parent detrimental to my immediate families financial future. In other words, I won’t own a home of my own and will only be paying rent -although the outcome of actually receiving title to the property is secured by the estate after my parents pass away, say in 20 to 30 years. I won’t be able to write off property taxes or home-owners mortgage interest on a loan when doing my federal income taxes each year.
Is this arrangement with my parents financially a good thing for me and my immediate family? What are the pro’s & con’s for me in this arrangement as you see them?
What is your opinion on this housing arrangement and what, if any, issues would you recommend that she pays special attention to with it?