When you say 2 unit of different size, do you mean a 2 bed on one side and 3 bed on the other (or similar)?
If so, why not just get a 3/3? It’s always easier to rent out/sell down the road if things change.
Put the property into a trust with your LLC/living trust being the beneficiary.
There’s only a couple advantages to doing this:
Hides your assests (the property).
Hides your parents assets (the property).
If you/them move/decide it’s not working/dies/whatever, the person(s) left can retain control w/ agreed upon conditions.
Of course the transfer would come after closing with the new mortgage company. Just have your title company do it all at the same time and include it in the price.
We are looking at buying a duplex with my parents. The idea is to get a place with 2 unit (of different size) and proportionately share down payment and ongoing PITI etc. We will probably move into our unit right away and parents may rent theirs for a couple of years until they retire.
Any advice on buying it (jointly) in our names versus setting up a structure like LLC?
Re: Buying a duplex (occupied / rental) … - Posted by Frank Chin
Posted by Frank Chin on August 21, 2007 at 06:12:16:
Sam:
You’ll need to check your state laws on various issues before going LLC with your own home.
Some states have liberal homestead laws, such as FL, and will protect your home, better than an LLC.
There’s a recent discussion on “workman’s comp” issues on the legal board. In NYS State, insurance companies are required to provide WC for homeowners in the howowners policy, so if some worker trims a tree, falls down, or falls off the roof, is a “off the books” contractor, or an illegal alien, you’re covered as a homeowner. Put that into an LLC, you have NO WC coverage, can’t buy it under a regular general liability policy, unless you get a separate WC policy which is complicated and you’ll need to be a company with a payroll to get it, and state law puts owners of corps, LLC’s personally responsible for WC, so an LLC is not going to cover you there at all.
Then after all of this, homeowners enjoy 250K capital gains tax free, and 500K as a couple, and you’ll have to deed it back to yourself before you sell.
I would take title with your parents with “right of survivoship”, so on their death, their portion goes to you, or visa versa, without going thru probate, and all of you can claim a homeowners exemption if you decide to sell, and move into a larger place. If they rent, you’ll have to pay capital gains on the half that’s rented out, even to your parents, if you decide to sell.