No. of Recommendations: 5
Thank you all for your prompt feedback, your input is very helpful in considering how to approach this.


Okay, I'm confused. You talk about *you* qualifying for a mortgage, a family trust owning the home and having your daughter inherit it, but you also talk about your daughter collecting the rent, and your daughter being an 'owner/landlord'.

Yes, I don't think she would qualify for a mortgage on her own. But I'd still like her to have a house that she knows would be hers eventually to live in. So perhaps I have in mind more of a live-in property manager in the shorter term. Also, the estate plan/will has the current family home going to her brother which we all agreed. That doesn't mean that I 'owe' her a house too, but I am beginning to consider what is the best way to set things up for her.

So, whose tax return will the rental income be accounted for on? Yours, your daughter's or will the family trust file it's own tax return? And who will take the depreciation on the portion of the home that's a rental? Will you be able to deduct the interest on the mortgage because you are paying the mortgage, and you also own the home? Or will your daughter be paying the mortgage, while you own the home, so neither of you will be able to deduct the interest? Will you need to file gift tax returns because you are giving your daughter the gift of free rent in a home that's not your principal residence? Or will she also be paying rent, so that the entire home will be a rental?

I file a tax return myself for all the income from the assets in the trust. So I would have all the tax implications of the house including income associated with the rents (from daughter and any tenants), plus the depreciation and any other deductions. I do have a good tax professional to sort the options. So I guess that makes it an investment property? And yes, a mortgage professional will be helpful in figuring out what type of loan would be available.

I think a 26 year old needs to move out of mommy's house and learn how to pay her own way. You are not doing her any favors by paying and providing everything for her.

I hear you on that one. I have a close friend of many years who has made some terrible financial choices where her kids were concerned (funded a start-up business), and because she's a close friend I've had to stay supportive when that the business failed, she lost money and the now unemployed and divorced kid moved back in with her.

I've been generous with my kids, but by no means paid for everything. Both my kids had student loans for their in-state educations, DD is paying hers still but her older brother has paid his off. Both kids pay rent, their own stuff (phone, car insurance) and have assigned household tasks. They've lived away from home at college but moved back. Part of it is financial (rents in this town are way more than they could sensibly afford based on their entry level career positions) and part of it emotional (we lost their dad - my husband - while they were at school) and I was glad for a break from the living alone.

It think it comes down to the family's values and a judgement call. Still, perhaps it would be better to send her off to rent for a while and see if she wants to live in Phoenix before making a real estate investment.

She pays rent, and she helps around the house, and I like having the company. It would be absurd for her to move out just to be paying even more rent to someone else or needing roommates when she can just be here.

Yes, very similar in my home. I like the company and have a well-run household. Both my kids were pretty tired of the college roommate lifestyle by the end of school.

Sounds like continued helicopter parenting.

Guilty as charged! I'm very into personal finance and have forced them to open and fund IRA accounts, have an emergency fund, bore them silly with endless discussions about which companies I think are worthy of investment. I ask way too many questions about how they are spending their money and pass judgement on what I think is a poor use of their discretionary funds (annual pass to Disneyland?? what?!)

Thank you again for all your insights. I will continue to mull the options here.

TMFCADeb
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