Multi generation family living under one roof?

[Hrhpd]

That is the approach we took with my parents. We owned the home and leased it way below market rate to them. It worked out great but they wanted to live near a military base to capitalize on their retire benefits so it was not close to us. Once it was just my dad, he moved up closer to us and pretty quickly moved in with us.

Did you have to go through the paperwork to have the home declared as section 8 housing?

I know a couple of our friends have purchased condos for their children with disabilities. In order to not affect the child's SSI/SSDI and to be able to charge under market rates, they had to get the condos declared section 8 housing. One mother had her basement made into an apartment for her daughter and she had to have the basement declared section 8 before she could rent it to her.

 

[Hrhpd]

They amassed the debt because they retired 15 years ago and did not change their lifestyle at all despite their annual income dropping by 70%. A little tiny bit at a time until they owe what they owe.

They are current on their taxes and mortgage and do not have any liens or additional mortgages on the home beyond the first.

Again, how are you planning on keeping $100k of creditors from trying to take your basement when they move on?

 

[Southernmiss]

Can the in laws sell their home and downsize to a home near your family? Maybe put them on a Dave Ramsey plan and help them to spend less and save money? Sounds like financial guidance is all they need.

Their ages alone don't merit needing to live with family. And it sounds that they don't have medical needs requiring them to need care.

 

[barkley]

Did you have to go through the paperwork to have the home declared as section 8 housing?

I know a couple of our friends have purchased condos for their children with disabilities. In order to not affect the child's SSI/SSDI and to be able to charge under market rates, they had to get the condos declared section 8 housing. One mother had her basement made into an apartment for her daughter and she had to have the basement declared section 8 before she could rent it to her.

if the parents weren't in receipt of ssi it wouldn't have been an issue. ssdi and traditional social security don't have the income/asset rules that ssi has. now-if the parents were getting other forms of public assistance (food stamps, medicaid...) then it could have been a factor but there's still much easier ways to structure this kind of arrangement than having to get a place designated as section 8 housing (but in the cases you mentioned i suspect the parents didn't mind getting the remainder of the full market value of the rent paid to them each month by their local housing authority-depending on the area it can be a significant chunk of change).

 

[kaytieeldr]

Instead of paying rent, we save our money and pay the taxes on the house (we live in CT - paying rent to my mom would probably be cheaper!).

Yeah, I think your mom knew that

It can still get a little damp, though.

Dehumidifier, and overall the basement is more temperate.

Do you have siblings that will receive part of an inheritance? Have you thought about how you are going to settle the estate when they have money invested in your house as their residence?

In all fairness, whatever anyone does with their money while living is their business, not that of any potential beneficiaries. If instead the parents set up a reverse mortgage, for example, that would reduce or eliminate any inheritance.

 

[kdonnel]

Did you have to go through the paperwork to have the home declared as section 8 housing?

I know a couple of our friends have purchased condos for their children with disabilities. In order to not affect the child's SSI/SSDI and to be able to charge under market rates, they had to get the condos declared section 8 housing. One mother had her basement made into an apartment for her daughter and she had to have the basement declared section 8 before she could rent it to her.

No.

We treated it as personal use property for IRS purposes and did not treat it as a rental property.

 

[kdonnel]

Again, how are you planning on keeping $100k of creditors from trying to take your basement when they move on?

My in laws are not and will not be on the deed to the home.

When the credit card companies started calling after my dad died with $60,000 in debt I told them the truth. He died with an estate worth $0. They stopped calling.

I expect my wife will do the same when her parents die.

The IRS says you can gift up to $15,000 per individual per person per year in 2019 tax free. That means my father in law can give $15,000 to each of us and my mother in law can also give $15,000 to each of us. That $60,000 exceeds the amount that would be given by my in laws to finish the basement. There is no tax liability for the dollar amounts we are discussing.

 

[AppleDumpling]

OP, it sounds like you have already figured out most of the details, including legal, financial and tax ramifications and you are leaning in favor of the plan. It’s really a very personal decision. I would have an honest talk with your in-laws again and ask your MIL why she is hesitant.

 

[RangerPooh]

We live in a multi generational household. It wasn't something that we planned to do, but my parents are not the most financially stable, so you do what needs to be done. They have their own room and really just keep to themselves. We eat dinner together. Rather than them paying rent they run carpool for my (4) kids to two different schools, my dad will also make their lunches and breakfast. It works. I'm no longer paying for childcare so it's been a win.

Think about what the pros and cons would be. If hey are paying for half the renovation will they receive proceeds if the home is later sold? Or would it be more of a loan that you would pay back? If they are assisting with renovations I don;t know about the charging for rent portion. But you do what you need to do. Just be clear on the expectations.

 

[SmallWorld71]

Is it really? Perhaps the definition varies by region in the country.

If it is it will not be a problem. There are already 3 fully permitted finished basements in my neighborhood that I know of with separate entrances and kitchens and many more where the basement was finished for a play room, home theater, extra bedroom, etc.

I know we have gone to many Street of Dreams events in the Metro Atlanta area and the some of the show homes always had fully finished basements with full kitchens in new construction in single family neighborhoods.

FWIW, we have an apartment in our basement: 1 bedroom, living room, kitchen, bathroom, that was there when we bought the house. It is considered a single family home, not multi family. There is a separate outside entrance to the apartment and it is connected to the rest of the house by the other side of the basement.
In the 10+ years we have been here, we have had a few different 'tenants,' including my uncle, my grandparents, and currently a long time friend of my sister's and her little boy. At some point, the plan is for my mother and step father to move in. We do not make a profit from the space, but do collect money to cover the extra costs: water, electricity, etc.... We have never felt there were any privacy issues. The rest of the house is big enough for everyone to have personal space.

 

[Disney Doll]

I can’t imagine spending my retirement years in a basement. Sounds miserable.

A friend of mine had a beautifully finished walk out basement that walked out onto a beautiful lake. Trust me, it was nicer than my house.

 

[PollyannaMom]

The IRS says you can gift up to $15,000 per individual per person per year in 2019 tax free. That means my father in law can give $15,000 to each of us and my mother in law can also give $15,000 to each of us. That $60,000 exceeds the amount that would be given by my in laws to finish the basement. There is no tax liability for the dollar amounts we are discussing.

That's what I was going to say as well.

I also wonder - if the rent is specifically to help with college expenses, would there be any advantage to having them make direct tuition payments to their grandkids' schools?

The only thing I can't get behind is not encouraging them to at least try to pay off their debts.

 

[kdonnel]

The only thing I can't get behind is not encouraging them to at least try to pay off their debts.

That's between them and the credit card companies.

I do remember talking with them when my dad passed away. They kept asking if I thought it was fair that he died owing so much and that there was no money in the estate. I always countered with do you think it is fair he died at 69 from pancreatic cancer?

 

[Nancyg56]

That's between them and the credit card companies.

I do remember talking with them when my dad passed away. They kept asking if I thought it was fair that he died owing so much and that there was no money in the estate. I always countered with do you think it is fair he died at 69 from pancreatic cancer?

I think that no one can really control if and when cancer will strike, so "fair" is kind of loaded for a response.

I am not going to comment on the debt other than to say that I think that moving funds in order to avoid paying debt is unfair to those who honor their obligations, but end up funding those who do not. I have no idea what your IL's intentions are so I am not suggesting that they will foist their CC debt off.

 

[barkley]

just curious-

with their attitude on not being obligated to pay off their existing debt while continuing to incur more, since your plan entails you/your wife also paying out or taking on the debt for half the cost of the remodel are you at all concerned that they will simply default on paying you rent?

since the advantage for your side of this deal is to boost your income to help with your kid's college expenses it seems risky to be, in essence extending credit (in the form of anticipated rent) to people who don't seem to be overly committed to keeping their financial obligations. you are taking on the added cost of property taxes, utilities, insurance and the like-if they fail to pay will it be possible for you to help you kid w/college in the manner you desire while essentially taking on the financial support of 2 other people?

 

[kdonnel]

just curious-

with their attitude on not being obligated to pay off their existing debt while continuing to incur more, since your plan entails you/your wife also paying out or taking on the debt for half the cost of the remodel are you at all concerned that they will simply default on paying you rent?

since the advantage for your side of this deal is to boost your income to help with your kid's college expenses it seems risky to be, in essence extending credit (in the form of anticipated rent) to people who don't seem to be overly committed to keeping their financial obligations. you are taking on the added cost of property taxes, utilities, insurance and the like-if they fail to pay will it be possible for you to help you kid w/college in the manner you desire while essentially taking on the financial support of 2 other people?

It would make paying for college easier but paying for college is already possible whether they move in or not.

They are going to end up with us at some point or another unless they suddenly die which neither of their parents did. They lingered and lingered and lingered.

 

[CruiseTraveler7]

It is hard but possible. It helps if you have completely separated floors. It is nice for the in laws and for their grandchildren to be able to hang out whenever they want. On the bright side, you don't need a babysitter, just ask them and they will gladly do it

 

[china mom]

I live in a multi-generational family. Here are my thoughts:

Establish your level of your expectation of privacy prior to the move in. Are they going to have a truly independent living space or are they sharing your house but have their own amenities?

Is there a plan for if they need physical care in the future?

How much care could you be able to provide on your own (care giving is physically and emotionally draining, plan on needing help)

Are they joining you for meals each evening? Sitting on your couch for TV time? Both options are good but make sure that you are on the same page.

My quick and dirty story is that my mother and I had a less than perfect relationship but being the good child, I was prepared to step up when she needed it. A couple of years before her medical decline, she approached me about adding a MIL suite to my house with her money. Due to topography, that wasn't feasible;e so DH and I bought a new house with an existing suite and had her help with the down payment.

My original plan was for her to live independently while she could but still join us for dinner every night. She quickly became more and more dependent and I became her primary caregiver. I brought in help during the day because I worked.

Caregiving sucked the life out of me and I suffered the physical toll due to having to lift her in and out of bed, toileting etc.

She eventually passed and we ended up renting the apartment to, ironically, one of her caregivers who had become a friend. She is 82 and in excellent health.

She knows she is getting a great deal on rent and I know I am getting a great deal with all the help she provides with the house and the kids BUT it is really hard having another woman in your home. Sometimes I am very happy with our arrangement but sometimes I wish we had rented her the apartment but kept the adjoining door shut instead of having such an open living situation.

Multi generation living can be done but try to make everyone aware of what it is going to look like.

 

[Moushe]

My parents live in our house and while it was an adjustment it works for us.

Several years ago for various reasons my parents found themselves unable to cover all their expenses. My husband and I were helping them out financially. Once we had kids we paid my mom to watch them for the first few years rather than paying daycare. But it got to a point where each year their rent and general expenses went up and they needed more help from us. DH and I realized we could no longer offer that type of financial support. We were planning on buying a home and had to start saving money for the kids college.

We decided that having my parents move in with us would be easier. I'd like to add that we're Hispanic so this arrangement isn't totally strange for us.
We bought a house with plenty of bedrooms and a layout that allows us all to have our own space and not be on top of each other. My parents do not pay rent but they do school drop offs and pickups since my husband and I both work and have a 1hour plus commute.

Its not the perfect scenario but there are more pros than cons. The pros being they help us out A LOT with the kids, my kids love having their grandparents with us, and I don't have to worry about my parents financially or even physical/emotionally since they are right there. The cons are mostly just affecting me in the sense that my mom wants to give her input on everything I do like how I cook, clean, etc. I usually just let it go because its not worth an argument and in reality in her mind she's helping me by giving me "advice" so I try not to take it the wrong way.

 

[kdonnel]

Since this bubbled back up to the top and today was drywall day....



Two people drywalled all 1219 sq ft in 7 hours! Hopefully the drywall finishers come tomorrow and start that process. For many of the rooms all that will be left is trim, paint, and floor. Only the bathroom and kitchen have significant other work to be done.