If the parents pay less than full market rent, the home could be considered a second home instead of a rental property.

Do not do it.

Anonymous wrote:It's better to inherit the house when they die, because you get the stepped up cost basis. Does he not know that? I don't see how this is a good idea at all.

+10000! This is a tax disaster. And +10000 that you will have to pay taxes on the rental income. Why on earth would you do this?!?! If you and your DH want to invest in real estate, invest in a real estate fund that is diversified. Not some random thing selected by your ILs.

I am a poster who frequently advocates being accommodating and diplomatic with inlaws and my reaction to this is total horror and NO. Do not let this happen!

Are they unable to get a loan?

What does he see as the upside to this? Because I can't see any?

I wouldn't do it. It is three against one but you are the breadwinner. It would breed resentment to say the least. Put your foot down on this one and like the PP said, get a financial adviser to back you up.

Has he considered the tax implications? You will have to claim the rent money as income. Also, if they are renting from you, he will have to get a business license to rent out the property.

It's better to inherit the house when they die, because you get the stepped up cost basis. Does he not know that? I don't see how this is a good idea at all.

Doesn't look like you have much of a choice. If you say no, your husband could go it alone. If you say yes, you'll feel resentment.

In the end, you will still get the debt and or house in the event of a divorce.

The only advice I would give you is to sit down with everyone, do the math, make sure the in laws can pay the note and or make sure you can make the payments in case they can't.

Things to consider

Job loss
Medical illness
Death

Anonymous wrote:Why don't they take out their own mortgage?

Yes and how much mortgage are we talking here?
I could see a little 1 bed condo in a 55+ community, but if they are using this to live beyond their means, then no

Anonymous wrote:Can you bring in a trusted third party, like a financial advisor or a lawyer or someone along those lines, and have them review and assess the investment? They're going to say its a bad idea and a potential money-pit and then you will have an independent expert telling DH the deal is a bad idea.

Don't back down OP!

+1
Monday morning, make your appointment with a flat fee financial advisor. That is the only way

Why don't they take out their own mortgage?

Can you bring in a trusted third party, like a financial advisor or a lawyer or someone along those lines, and have them review and assess the investment? They're going to say its a bad idea and a potential money-pit and then you will have an independent expert telling DH the deal is a bad idea.

Don't back down OP!

He tells me it's a good investment and as an only child, it will work out for us. His idea is that they put down 20% and we take out the loan and they pay rent. After they die, we get the house. I don't see how I win in this and I can see a million bad situations.

I like my in-laws but this is just such a hugely bad idea. The worst part is that he already told them that he wants to do it so if I say no, it's all on me.

They are young (early 60s) so hypothetically they could outlive my retirement (i want to retire in 20 years).

I also feel like I"m being saddled with a debt that I don't want and doesn't benefit me. ANd taking on this debt forces me to stay working my ass off. I make more than either my FIL or my husband and I feel like they want to use me. DH says it only won't work if I don't trust them but I don't. Not with my very hard earned money. They are all only children (and a stay at home who hasn't worked for the last 30 years) and think they should get what they want. I am not and earned my money.
I'm so pissed about being put in this !@#$%^up place that I have no idea where to start talking to DH about this. Part of me just wants to say no and not discuss it.

anybody have more productive thoughts?