Not only that.....there would always be a potential for your in-laws tell you what to do with the house)(sell, paint, remodel, if you don't keep it as clean as they would, etc)...because they brought it for their son.

Anonymous wrote:OP here again. Thanks everyone for your responses!

Him and his sister's name is on the title currently, but I told him that if I move into the home that his sister's name would have to come off the title and mine would have to go on it, so I'm guessing if we live there for a minimum of two years the 500k exclusion would kick in.

I know selling the home now and splitting the profits is probably the best and easiest thing to do, but there's so much equity in the home right now and it's really close to being paid off so I thought it would be a good idea if we moved in there, sold the house after we paid it off, and then use the money from the sale to put a hefty down payment on a bigger home.

I don't know what to do.

What you're saying is that the house is close to being paid off already, so just do what you outlined: sell it now and use that money for a hefty down payment. Take our advice - avoid all the potential problems from getting involved in this house. Things occasionally go smoothly but far more often go really, really wonky. Too many people, too much potential for drama and discontent. Protect your young marriage-to-be and your relationships with your future in-laws. Buy something new for you and FDH.

How about you talk to her and work out a written agreement right now.

Anonymous wrote:

Anonymous wrote:OP here again. Thanks everyone for your responses!

Him and his sister's name is on the title currently, but I told him that if I move into the home that his sister's name would have to come off the title and mine would have to go on it, so I'm guessing if we live there for a minimum of two years the 500k exclusion would kick in.

I know selling the home now and splitting the profits is probably the best and easiest thing to do, but there's so much equity in the home right now and it's really close to being paid off so I thought it would be a good idea if we moved in there, sold the house after we paid it off, and then use the money from the sale to put a hefty down payment on a bigger home.

I don't know what to do.

If I were his sister, I would refuse to be removed from the title without being bought out at that moment in time. Would you be prepared to pay her?

Me too. ... espeically if later on in life I start thinking about how I would need the money for a new house, to fund my kids college fund, for vacation, for retirement or just becasue it would make no since for me to tkae 100k when I could get 400k instead because of the maryket.

Money changes situations...beleive me...I went thru something similar with my family. Gee...was I surprised how people changed....Thanksgiving dinner was NEVER the same again.

Anonymous wrote:Okay I just reread your original post.

You need to figure out what is half of what the parents put into the house, since that is what they feel she deserves to get. Then you need to offer her that amount in exchange for getting her off the title and you on the title.

I am not a real estate attorney so there may be something wrong with this analysis, but that seems like a good thing to do. You need to consult specialists.

Well, no. The house needs to be appraised and she and her financee need to buy her out for 1/2 of the current value.

Unless the parents want to be repaid, in which case, 70% of the value is paid to the parents since that's their equity stake now. The brother and sister own the other 30% and brother and intended would have to buy out 50% of that. Either way, brother and financee will have to finance about 85% of the house value in order to own it, unless the parents gift their 70%, in which case the 85% reduces to to 50%.

Either way, a gift tax return will likely have to be filed with the IRS by the parents. Unless this house isn't worth much. Even a gift of 30% is likely to exceed annual tax-free limits. And the parents will, in fact, owe capital gains tax on the 70%.

Okay I just reread your original post.

You need to figure out what is half of what the parents put into the house, since that is what they feel she deserves to get. Then you need to offer her that amount in exchange for getting her off the title and you on the title.

I am not a real estate attorney so there may be something wrong with this analysis, but that seems like a good thing to do. You need to consult specialists.

You need to consult a tax and estate attorney and real estate specialist.

I think you should buy sister out now and get her off the title. I am confused, what percentage of the house do the parents feel sister is entitled to? It doesn't seem quite right for you all to pay the mortgage the next five years and upkeep and taxes etc. and then let her have the profit from that.

Anonymous wrote:OP here again. Thanks everyone for your responses!

Him and his sister's name is on the title currently, but I told him that if I move into the home that his sister's name would have to come off the title and mine would have to go on it, so I'm guessing if we live there for a minimum of two years the 500k exclusion would kick in.

I know selling the home now and splitting the profits is probably the best and easiest thing to do, but there's so much equity in the home right now and it's really close to being paid off so I thought it would be a good idea if we moved in there, sold the house after we paid it off, and then use the money from the sale to put a hefty down payment on a bigger home.

I don't know what to do.

If I were his sister, I would refuse to be removed from the title without being bought out at that moment in time. Would you be prepared to pay her?

OP here again. Thanks everyone for your responses!

Him and his sister's name is on the title currently, but I told him that if I move into the home that his sister's name would have to come off the title and mine would have to go on it, so I'm guessing if we live there for a minimum of two years the 500k exclusion would kick in.

I know selling the home now and splitting the profits is probably the best and easiest thing to do, but there's so much equity in the home right now and it's really close to being paid off so I thought it would be a good idea if we moved in there, sold the house after we paid it off, and then use the money from the sale to put a hefty down payment on a bigger home.

I don't know what to do.

In summary: real estate is not a a good investment for children.