The beatles Case Study

[ShoulderThingThatGoesUp]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

[RetiredAt63]

It's just not something she is willing to do to her family.

I though I had bowed out a few days ago, but I have to respond to this.  And rephrase what you said.

She is not willing to do this to her parents.  She IS willing to do it to HER FAMILY.  Because you and the kids are her primary family.

Years ago I was at the wedding of two friends who were just graduating university.  The priest pointed out that when you get married, the fancy wording means that you and your spouse are now each other's primary family.  "Forsaking all others" means your parents are lower on your priority scale than your spouse and future children.

So let us be clear here.  She is willing to have her primary family people, including her children, be massively in debt and at risk of a lawsuit (until the rental gets sold).  She is also willing to have her third priority family (your parents, so your second priority family people) keep giving the 2 of you money.

All this is so that her secondary priority family people can live in luxury.

Financially what you need to do is clear.  Sell both houses.  To any buyer.  Cut the financial strings with both sets of parents.  Of course that is the hard part.

You two don't need us.  You need a marriage counselor.

[Tyson]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

[snacky]

It's just not something she is willing to do to her family.

I though I had bowed out a few days ago, but I have to respond to this.  And rephrase what you said.

She is not willing to do this to her parents.  She IS willing to do it to HER FAMILY.  Because you and the kids are her primary family.

Years ago I was at the wedding of two friends who were just graduating university.  The priest pointed out that when you get married, the fancy wording means that you and your spouse are now each other's primary family.  "Forsaking all others" means your parents are lower on your priority scale than your spouse and future children.

So let us be clear here.  She is willing to have her primary family people, including her children, be massively in debt and at risk of a lawsuit (until the rental gets sold).  She is also willing to have her third priority family (your parents, so your second priority family people) keep giving the 2 of you money.

All this is so that her secondary priority family people can live in luxury.

Financially what you need to do is clear.  Sell both houses.  To any buyer.  Cut the financial strings with both sets of parents.  Of course that is the hard part.

You two don't need us.  You need a marriage counselor.

+1

[ketchup]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

In-laws owe six figures in back taxes.

Beatles could potentially get the equity out with a cash-out refi (if his credit isn't shot, which it very well may be).  Then the payment would go up a bit, forcing in-laws to pay for the equity they were tying up before.

[The beatles]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

[BeanCounter]

It's just not something she is willing to do to her family.

I though I had bowed out a few days ago, but I have to respond to this.  And rephrase what you said.

She is not willing to do this to her parents.  She IS willing to do it to HER FAMILY.  Because you and the kids are her primary family.

Years ago I was at the wedding of two friends who were just graduating university.  The priest pointed out that when you get married, the fancy wording means that you and your spouse are now each other's primary family.  "Forsaking all others" means your parents are lower on your priority scale than your spouse and future children.

So let us be clear here.  She is willing to have her primary family people, including her children, be massively in debt and at risk of a lawsuit (until the rental gets sold).  She is also willing to have her third priority family (your parents, so your second priority family people) keep giving the 2 of you money.

All this is so that her secondary priority family people can live in luxury.

Financially what you need to do is clear.  Sell both houses.  To any buyer.  Cut the financial strings with both sets of parents.  Of course that is the hard part.

You two don't need us.  You need a marriage counselor.

Wow. This is by far the best advice on this thread.

[BigRed]

Also, the longer her family is there, they will have paid a larger and larger share of the equity in the property.  When (if?) the house is eventually sold, who gets to keep the profit may become quite contentious.  Given that the original sale of the house to the Beatles family was within the family, there may be a very complicated history that would make pocketing the $100k very difficult, and it is highly unlikely that the $300k house has $100k of equity in it that really belongs to the Beatles family. 

Thinking about it more, the beatles family certainly hasn't paid $100k of equity in the few years they owned it, and prices in his area have certainly not risen 33%.  They had to borrow $15k from his parents to "pay closing costs" initially.  There's no way that $100k of equity is unambiguously beatles' to use.  Some of it (maybe all of it?) has to belong to the in-laws, or to beatles' parents, but I'd guess very little to beatles and family.  Which makes this worse.  Beatles, you have a massive liability (taxes and mortgage in your name) with no access to the asset (physically or financially).

So, this is a very good time to initiate this conversation with the in-laws.  You are in massive debt and it's clear that this situation can't continue indefinitely, which gives you an excellent reason to bring the topic up.  It will be uncomfortable, but some plan must be made for how this will eventually unwind.  Also, avoiding uncomfortable topics is what got you here in the first place, so time to change that behavior.

[notactiveanymore]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

Mrs. Beatles' parents used to live in the big house but something happened (IRS debt occurred or IRS seemed like they were going to seize the house?) and so the Beatles family purchased the big house from the in-laws. They realized they could not afford the payments and/or maintenance on Big House, so the Beatles family moved into House 3 (current house - also, I am baffled that they were able to get a mortgage on House three). Mrs. Beatles' parents wanted to live somewhere really nice and presumably still loved their former house, so the in-laws moved in and assumed the payments and maintenance cost of Big House while the mortgage renamed remained in the Beatles family name.

One could assume that the mortgage payment on the Big House is larger than on House 3, so we are left with the current understanding that despite the fact that the in-laws owe the IRS $200k, they can afford to spend over $1800/month on the Big House expenses. Beatles family believes not allowing the in-laws to live in Big House would be mean. They have 100k in equity in the house, mostly due to market recovery. Apparently anything less than large property with a big house and granite counter tops is not acceptable housing accommodations for in-laws who, again, owe the IRS $200k. In-laws cannot buy a house presumably because then the IRS would know they have assets.

It is unclear why in-laws cannot rent a place more suitable for their financial situation. It is unclear why Beatles family is okay with tying up 100k in equity and let the debt stay on their record when it seems like in-laws could have several rental options.

[Malum Prohibitum]

Also, the longer her family is there, they will have paid a larger and larger share of the equity in the property.  When (if?) the house is eventually sold, who gets to keep the profit may become quite contentious.  Given that the original sale of the house to the Beatles family was within the family, there may be a very complicated history that would make pocketing the $100k very difficult, and it is highly unlikely that the $300k house has $100k of equity in it that really belongs to the Beatles family. 

Thinking about it more, the beatles family certainly hasn't paid $100k of equity in the few years they owned it, and prices in his area have certainly not risen 33%.  They had to borrow $15k from his parents to "pay closing costs" initially.  There's no way that $100k of equity is unambiguously beatles' to use.  Some of it (maybe all of it?) has to belong to the in-laws, or to beatles' parents, but I'd guess very little to beatles and family.  Which makes this worse.  Beatles, you have a massive liability (taxes and mortgage in your name) with no access to the asset (physically or financially).

So, this is a very good time to initiate this conversation with the in-laws.  You are in massive debt and it's clear that this situation can't continue indefinitely, which gives you an excellent reason to bring the topic up.  It will be uncomfortable, but some plan must be made for how this will eventually unwind.  Also, avoiding uncomfortable topics is what got you here in the first place, so time to change that behavior.

I had foreseen this, too, but you see I asked him what else is going on, what is the backstory, what is leaving out, and he assures us, NOTHING.

I am still pondering the questions I asked him in post #1104, though, such as how long this obligation to keep the inlaws living large continues.  Forever?  For life? 

As well as what, exactly, his wife thinks she would be doing to these people who obviously have PLENTY of money to rent elsewhere.

[ketchup]

Also, the longer her family is there, they will have paid a larger and larger share of the equity in the property.  When (if?) the house is eventually sold, who gets to keep the profit may become quite contentious.  Given that the original sale of the house to the Beatles family was within the family, there may be a very complicated history that would make pocketing the $100k very difficult, and it is highly unlikely that the $300k house has $100k of equity in it that really belongs to the Beatles family. 

Thinking about it more, the beatles family certainly hasn't paid $100k of equity in the few years they owned it, and prices in his area have certainly not risen 33%.  They had to borrow $15k from his parents to "pay closing costs" initially.  There's no way that $100k of equity is unambiguously beatles' to use.  Some of it (maybe all of it?) has to belong to the in-laws, or to beatles' parents, but I'd guess very little to beatles and family.  Which makes this worse.  Beatles, you have a massive liability (taxes and mortgage in your name) with no access to the asset (physically or financially).

So, this is a very good time to initiate this conversation with the in-laws.  You are in massive debt and it's clear that this situation can't continue indefinitely, which gives you an excellent reason to bring the topic up.  It will be uncomfortable, but some plan must be made for how this will eventually unwind.  Also, avoiding uncomfortable topics is what got you here in the first place, so time to change that behavior.

This is a good point.  To strengthen any defense to BS here, even if you end up leaving the in-laws in that house, it might make sense to have the in-laws sign an explicit lease on the property, and have them pay YOU the bills, and then YOU pay the bills.  That way it's clear that they are RENTING it from you in a proper landlord-tenant relationship, not giving you money that pays for expenses of the house they probably still think of as theirs.  Also, that way you're sure everything is getting paid so nothing extra-stupid happens to push you off a cliff.

[Tyson]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

Ah, OK.  So sell the house and let them rent somewhere else.  Not selling the house is directly hurting your family.  You, your wife and your kids are directly suffering because you are trying to be nice.  The in-laws are adults, they can find another place to stay.  If they can afford to rent a place that you can't afford the mortgage on, clearly they don't have a cashflow problem.  Let them use that $$ elsewhere so you can get the equity out of that home.

[ShoulderThingThatGoesUp]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

Or they could pay what they owe.

And pretty soon you're going to be in the same situation and all the house equity you have will evaporate. What is their plan when your debts make it so you can't own real estate anymore?

[Malum Prohibitum]

It's just not something she is willing to do to her family.

I though I had bowed out a few days ago, but I have to respond to this.  And rephrase what you said.

She is not willing to do this to her parents.  She IS willing to do it to HER FAMILY.  Because you and the kids are her primary family.

Years ago I was at the wedding of two friends who were just graduating university.  The priest pointed out that when you get married, the fancy wording means that you and your spouse are now each other's primary family.  "Forsaking all others" means your parents are lower on your priority scale than your spouse and future children.

So let us be clear here.  She is willing to have her primary family people, including her children, be massively in debt and at risk of a lawsuit (until the rental gets sold).  She is also willing to have her third priority family (your parents, so your second priority family people) keep giving the 2 of you money.

All this is so that her secondary priority family people can live in luxury.

Financially what you need to do is clear.  Sell both houses.  To any buyer.  Cut the financial strings with both sets of parents.  Of course that is the hard part.

You two don't need us.  You need a marriage counselor.

Excellent post.

I am glad you decided not to bow out.

The beatles may be glad you posted this one day, too.

[snacky]

I am concerned, baffled and perplexed at the tax evasion going on in this family. Are they the Trumps? Is contributing to the infrastructure they enjoy beneath them? How do multiple families simply not pay taxes to this degree?

Remember what it is that brought Al Capone down.

[honeybbq]

6.) Mrs. Beatles could work nights and weekends but isn't.  If we were in this position I would be working every hour I could when my spouse were home.

Don't forget Mr Beatles won't delivery pizzas either because he can't get in and out of his car that much. Maybe he has a real disability but it sounds like an excuse to me (since he hasn't mentioned a real physical disability).

[begood]

However, if we sell the rental, I don't think we will need to do anything else.

Selling the rental will reduce our expenses $1,777 per month.

We have already reduced our food expense by 1,000 per month.

This changes our situation in the following way:

> Our take home pay will be reduced to $3,941 /month
> Our expenses will be reduced to $3,246 / month

This will result in a surplus of $695 / month.

If I am missing something, please let me know.

The beatles,

Buddy, hey, is there something you are not telling us?  Selling the small rental is a GREAT step in the right direction, and I commend you for waking up and smelling the coffee, but selling the large rental, too, would literally solve all of your problems.  Literally. You could pay off everything to everybody.  You could keep your cars, furniture, televisions, and garage full of stuff, and it would all be paid off.

You could even keep your current house.  You would still have a mortgage.

What would THAT do to your monthly expenses???

But there is something else, and we need to know what it is.  The first time I brought this up as the solution to your financial problems, and an immediate one at that, you said your wife would divorce you.

So what is the back story? 

I cannot imagine my wife wanting to divorce me for liquidating six figures of cash when we are trying to survive and owing multiple tax authorities in ways that could bring everything crashing down, even IF her parents were involved.  She, quite simply, would never see our obligation to them as tying up six figures of cash to keep them in marble, heated floor, luxury.  Also, the fact that they have the money each month to pay all of the expenses for that place, which YOU could NOT afford, means that they will be ok. 

If you or your wife think they will not be ok, then help us understand WHY they won't be ok?  The first excuse, they owe the IRS, is not going to matter one bit to most real estate investors, who will be happy to rent them a place.  Is this just a matter of the inlaws being whiny and your wife not wanting to hear about it from them?  Are the inlaws controlling over their daughter?  What?

So what is the deal?  Your wife's one post, above, really did not illuminate the situation any further.  You mentioned she was upset by reading this thread.  So what is going on?

Nope, nothing hidden.

It's just not something she is willing to do to her family.

But her parents are willing to let their daughter (and their grandchildren) slide down the drain of overwhelming debt so they can... what... have granite countertops and heated floors? Do Mrs. Beatles' parents have any idea how much trouble you are in? Do they know that if they go live somewhere else (anywhere else), providing a path to sell the house, that their daughter's financial situation could be stabilized?

Did I read that they are keeping the rent that comes in from the apartment that has a lease through August? Do they know that you are not meeting your obligations every month and that money could be helping? You think of them as "covering costs" on that big house, but from the outside, it looks like they are taking terrible advantage of you and their daughter. They are set up in a sweet situation where 1) they don't feel any urgency to pay back the "couple hundred thousand" they owe because they have found housing that doesn't require that of them; 2) they know a landlord isn't going to snoop into their business too much; and 3) they're making money off rent on a property they don't even own! How is that fair to YOU, beatles?

And I'd like to see some source or citation for your assertion that "millions of Americans" owe back taxes. I have never in my life missed a tax payment.

Never mind. I googled it myself. It made me sad:

How many of your neighbors owe the IRS? | abc13.com
abc13.com/archive/6645858/
Jun 22, 2009 - Around 8.2 million Americans owed more than $83 billion in back taxes, penalties and interest. That's about $10,000 per person.

[honeybbq]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

This seems to be an inherited problem.

[MrsDinero]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

Ok I'm back in.

I'm starting to wonder if the reason the OP & his wife are excruciatingly resistant to selling this house is because they are knowingly helping their in-laws hide from the IRS.  If the family were to leave this house and go rent somewhere else then that place would run a credit check and their report.  If they are accepted as tenants somewhere then their credit report (most likely) will be updated to reflect this new address.  If they keep living in this house, though, then no address is registered. 

You can see the way the OP has normalized their in-laws unethical behavior using the phrase "like millions".

[Malum Prohibitum]

Did I read that they are keeping the rent that comes in from the apartment that has a lease through August? . . . and 3) they're making money off rent on a property they don't even own! How is that fair to YOU, beatles?

  I wonder if they are reporting that income to the IRS???   LOL!  Since they do not own the property they are renting, can they even deduct anything against that income?  I am not an accountant, but I am guessing not. 

[Malum Prohibitum]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

Ok I'm back in.

I'm starting to wonder if the reason the OP & his wife are excruciatingly resistant to selling this house is because they are knowingly helping their in-laws hide from the IRS.  If the family were to leave this house and go rent somewhere else then that place would run a credit check and their report.  If they are accepted as tenants somewhere then their credit report (most likely) will be updated to reflect this new address.  If they keep living in this house, though, then no address is registered. 

You can see the way the OP has normalized their in-laws unethical behavior using the phrase "like millions".

  Mrs. Dinero is smart and has a moral compass.

[BigRed]

Did I read that they are keeping the rent that comes in from the apartment that has a lease through August? Do they know that you are not meeting your obligations every month and that money could be helping? You think of them as "covering costs" on that big house, but from the outside, it looks like they are taking terrible advantage of you and their daughter. They are set up in a sweet situation where 1) they don't feel any urgency to pay back the "couple hundred thousand" they owe because they have found housing that doesn't require that of them; 2) they know a landlord isn't going to snoop into their business too much; and 3) they're making money off rent on a property they don't even own! How is that fair to YOU, beatles?

And I'd like to see some source or citation for your assertion that "millions of Americans" owe back taxes. I have never in my life missed a tax payment.

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

That said, this is another example of how things got to this level, because performing this service (which is, for all intents and purposes, tax evasion) for Mrs. Beatles' parents for free has given the Beatles family another hidden cost that they have ignored.  They are assuming loan risk, risk which an actual mortgage lender would never assume.  It is time to look this in the face and deal with it.  Much more important than starting up a side-project, and not something that is going to take only an hour of effort.

[researcher1]

We actually have!
We have not shopped for groceries since I started this case study.
Well, we did buy milk, applesauce, bread and a couple other staples. But that's it.
We skipped last weeks shopping and ate what we could out of the pantry and freezer.
Today is our 1st shopping trip since joining, and my wife is bringing $100 to spend.

Actually, this isn't true.

On 1/11, you spent $13 on staples, which is great.

But on 1/13, you posted "Mrs. Beatles shopping today," along with two receipts...
- Once receipt totaled $66.86 (makeup, dixie cups, ect!?!?)
- Another receipt totaled $44.24 (prairie dog antlers!?!?!)

[Tyson]

Wait, so the inlaws are living in the big house and are keeping the $$ from the rental unit on that property?  Why?

[larmando]

Congrats on deciding to sell Rental #1 and take control of a lot of the situation.

Regarding Rental #2, note that:
- the payment made by your inlaws to a mortgage in your name, property taxes in your name, and to upkeep still may very well constitute taxable income on your side.
- the tenants of the 1bedroom apt may also generate taxable income for you, regardless of who they pay their money to.

In general what your wife seems to say is that our lifestyle is beneath you, which *might* be problematic if that means you'll have to run up more debt to keep up with that lifestyle. All in all, all the best and good luck with all. Your new 600$ in cash flow is a good start, but you'll need more long term changes to make sure it doesn't disappear again.

[CheapScholar]

Stay tuned later today when Beatles will reveal that he still owes 100K on a yacht that his inlaws use.  Plus, a single post by a new user claiming to be "the father in law" explaining his misfortunes.

[MrsDinero]

Did I read that they are keeping the rent that comes in from the apartment that has a lease through August? . . . and 3) they're making money off rent on a property they don't even own! How is that fair to YOU, beatles?

  I wonder if they are reporting that income to the IRS???   LOL!  Since they do not own the property they are renting, can they even deduct anything against that income?  I am not an accountant, but I am guessing not.

OP is either a massive troll who has way too much time on his hands or he really is engaging in unethical possibly even illegal behavior.

I suggest that everyone takes a step back from this. 

[Iplawyer]

If the inlaws are paying all the bills to the big house, why not just sell it to them?  Their costs will remain the same every month and you get your equity out.

Because if the in-laws appear to have any assets the IRS will take them.

Wait, what?  I read through the thread but I missed that.  What's the deal?

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

Ok I'm back in.

I'm starting to wonder if the reason the OP & his wife are excruciatingly resistant to selling this house is because they are knowingly helping their in-laws hide from the IRS.  If the family were to leave this house and go rent somewhere else then that place would run a credit check and their report.  If they are accepted as tenants somewhere then their credit report (most likely) will be updated to reflect this new address.  If they keep living in this house, though, then no address is registered. 

You can see the way the OP has normalized their in-laws unethical behavior using the phrase "like millions".

DING DING DING DING DING,  WE HAVE A WINNER!   I said this many posts ago.  And it is not only an address - I'm pretty sure all parties consider the house is the in-laws as is the equity.  The Beatles are conspiring to hide this equity from the IRS.  If discovered - they too could go to jail. 

[OurTown]

Did I read that they are keeping the rent that comes in from the apartment that has a lease through August? Do they know that you are not meeting your obligations every month and that money could be helping? You think of them as "covering costs" on that big house, but from the outside, it looks like they are taking terrible advantage of you and their daughter. They are set up in a sweet situation where 1) they don't feel any urgency to pay back the "couple hundred thousand" they owe because they have found housing that doesn't require that of them; 2) they know a landlord isn't going to snoop into their business too much; and 3) they're making money off rent on a property they don't even own! How is that fair to YOU, beatles?

And I'd like to see some source or citation for your assertion that "millions of Americans" owe back taxes. I have never in my life missed a tax payment.

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

That said, this is another example of how things got to this level, because performing this service (which is, for all intents and purposes, tax evasion) for Mrs. Beatles' parents for free has given the Beatles family another hidden cost that they have ignored.  They are assuming loan risk, risk which an actual mortgage lender would never assume.  It is time to look this in the face and deal with it.  Much more important than starting up a side-project, and not something that is going to take only an hour of effort.

Ding, ding, ding, ding.  We have a winner!

[Zoot]

I wonder if they are reporting that income to the IRS???   LOL!  Since they do not own the property they are renting, can they even deduct anything against that income?  I am not an accountant, but I am guessing not.

I'm also not an accountant, but wanted to chime in on this one.

If there's income from the apartment, then my belief would be that technically, in the eyes of IRS, that income belongs to the Beatles family, not to the in-laws, since the Beatles family owns the house--no matter who the tenants are writing the check to.  The in-laws can't rent something that they don't own.

If that income isn't being claimed, then IRS might come after the Beatles family for more back taxes based on the apartment income.  If the check is in fact being written to the in-laws and should be going to the Beatles family and is not being reported, this could be seen by IRS as tax evasion (a felony, which can come with jail time).

In fact, the money that the in-laws are paying on the mortgage is itself income for the Beatles family.  This should also be claimed as income on the Beatles family tax return.

Beatles, I'd get this in front of the eyes of the accountant you're working with on your own IRS debt, to be sure that there's nothing else here that you need to be doing.  The last thing you want is MORE trouble with IRS.

[Laura33]

People are looking too far into it.

In-laws, like millions of Americans, can not own property because they have past due taxes owed.

So they rent.

Ok I'm back in.

I'm starting to wonder if the reason the OP & his wife are excruciatingly resistant to selling this house is because they are knowingly helping their in-laws hide from the IRS.  If the family were to leave this house and go rent somewhere else then that place would run a credit check and their report.  If they are accepted as tenants somewhere then their credit report (most likely) will be updated to reflect this new address.  If they keep living in this house, though, then no address is registered. 

You can see the way the OP has normalized their in-laws unethical behavior using the phrase "like millions".

This.  Millions of Americans do not owe six-figure tax debts.  Millions of Americans do not live in luxury homes with ponds and granite countertops while owing tax debts of any size.  Millions of Americans do not rely on their children to help them shield assets to avoid paying what they owe -- especially not at the cost of those children's own financial security.

Mr. Beatles, this is not "normal" in any way, shape, or form.  Your attempts to minimize/justify it say more about you than about the person to whom you are responding.

[Malum Prohibitum]

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

  Well, this would explain why he does not want to answer the questions posed in Post #1104.  They would be very uncomfortable to answer if this is just a aiding and abetting tax evasion.

It would also explain a great many other things, like why $100,000 in equity is "irrelevant."  It is irrelevant because it belongs to the tax dodgers, and does not belong to The beatles and his wife at all.

This makes more and more sense and explains The beatles' odd behavior in this thread.

Conspiracy.

[begood]

Let's look at this number again. I understand that it's from  8 years ago; let's use it as example:

How many of your neighbors owe the IRS? | abc13.com
abc13.com/archive/6645858/
Jun 22, 2009 - Around 8.2 million Americans owed more than $83 billion in back taxes, penalties and interest. That's about $10,000 per person.

According to the US Census, there were 306,000,000 people in the US in 2009. Let's round down:

Of 300 million people, 8 million owed back taxes. Don't let the sheer numbers normalize that situation. That's still only 2.6% of the population.

So your in-laws are part of the 2.6% of the population who owe back taxes. But they don't owe the $10k per person referred to above. They owe $100K - EACH, ten times that amount.

Your in-laws are in way deeper shit than you, beatles. I really hope they don't drag you down with them. You are already on that road, though. You owe $55K, if I'm not mistaken - $40K to the IRS and $15K in property taxes. You already owe five times the "average" of those back-tax-owing people.

Hardly anyone lives like this. I fear that your in-laws have normalized something that is NOT NORMAL. Break the cycle! We really, really want you to be free of these chains.

[Malum Prohibitum]

First off, I am not a tax lawyer, but, in doing a sham transaction, the IRS troubles actually spread to other family members.  The IRS can come after the person holding the property.  The IRS can still file a lien, a "nominee lien." 

In other words, transferring your property to another spreads your IRS problem to the other like an infectious disease.

The IRS actually does not like to take houses.  They will do so, however, in egregious cases where the parties have poked at them.  This appears to be a case ripe for that sort of consequence.

[RetiredAt63]

Stay tuned later today when Beatles will reveal that he still owes 100K on a yacht that his inlaws use.  Plus, a single post by a new user claiming to be "the father in law" explaining his misfortunes.

So cynical, so sad.  But so based on thread history.

Which father-in-law?  I would love a post from beatles' father (mrs. beatles' father-in-law) with their view on things.  I am not expecting it though.  Maybe I should write it?  ;-)

I am now thinking that now only does beatles need a good marriage counselor (for multiple reasons) and a good realtor (for house #1 and hopefully #2) and a CPA (for the IRS back taxes and all the extra taxes he will owe once he actually starts counting the rent from house # 2 and apartment as income, offset by whatever costs are involved), he needs a good tax lawyer to sort out the mess for house #2.  At this point I would be 1. checking with the bank to be sure all payments were up to date on house #2, and 2. getting the income transfer clear (as others have posted, rent from in-laws and apartment tenants to him, he pays house costs like mortgage, tenants can certainly pay their own utilities and living costs like hiring someone to cut the grass), and 3. making sure all tenants (house #1, house# 2 and apartment at house #2) have good tenant insurance.  I haven't seen any mention of tenant insurance on here - have I missed it?  Essential - he should not rent to anyone without it.

I have been sucked into the black hole again, I'm gone.

[OurTown]

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

  Well, this would explain why he does not want to answer the questions posed in Post #1104.  They would be very uncomfortable to answer if this is just a aiding and abetting tax evasion.

It would also explain a great many other things, like why $100,000 in equity is "irrelevant."  It is irrelevant because it belongs to the tax dodgers, and does not belong to The beatles and his wife at all.

This makes more and more sense and explains The beatles' odd behavior in this thread.

Conspiracy.

It's stuff like this that gives New York and New Jersey a bad name.  Well, New York anyway.  New Jersey already had a bad name.

[larmando]

Ok, giving things the benefit of doubt: perhaps they're not voluntarily doing anything illegal. It might be that the inlaws, seeing they couldn't own the property anymore, actually wanted their daughter to have it, and that the daughter actually wanted it for sentimental reasons. So they sold it to them, perhaps at fair price or something similar to fair price (what did they do with the income from the sale? did they pay back some debt/owed taxes?).

Indeed the beatles moved in there. But then had to move out given they weren't managing. So the inlaws moved back in ostensibly "to help": they are paying down the mortgage while the beatles live in a cheaper place. This would allow them at a later date to return to their "fancy home" once they sort out debt and/or mr. gets a raise. This might be what mrs. counts on, and why she doesn't want to let go of it: if she doesn't they're "temporarily" living in a cheaper place, if she does she becomes "normal" and loses her big mansion with acres of land, and knows she might never be able to get it back.

And we can see in the thread that they're not into changing lifestyles, becoming wealthy (at least through savings), or FI, just correcting course away from immediate disaster and go back to being "rich". (which is why they don't resist saving on groceries, but they wouldn't sell the cars for example)

[Malum Prohibitum]

This would allow them at a later date to return to their "fancy home" once they sort out debt and/or mr. gets a raise. This might be what mrs. counts on, and why she doesn't want to let go of it: if she doesn't they're "temporarily" living in a cheaper place, if she does she becomes "normal" and loses her big mansion with acres of land, and knows she might never be able to get it back.

  The beatles has posted nothing like this about it, in spite of interrogation aimed at getting the complete story.  If that was the explanation, he would have already made it.  It would have been quite simple to say, "We don't own the $100k in equity.  It belongs to my inlaws.  We have an agreement that they will get the house once their issues are worked out."  But he didn't.  Instead it was just, "My wife won't do that to her parents."  Whatever "that" is.

[Iplawyer]

First off, I am not a tax lawyer, but, in doing a sham transaction, the IRS troubles actually spread to other family members.  The IRS can come after the person holding the property.  The IRS can still file a lien, a "nominee lien." 

In other words, transferring your property to another spreads your IRS problem to the other like an infectious disease.

The IRS actually does not like to take houses.  They will do so, however, in egregious cases where the parties have poked at them.  This appears to be a case ripe for that sort of consequence.

Furthermore  - when you knowingly go about cheating the IRS - then there are criminal penalties.  People go to jail. Husbands and wives with kids go to jail.  This is serious shit.  The in-laws are living large at the expense of their daughter's family and have asked her family to be conspirators in defrauding the IRS.  Wow - just wow.  I don't know many mother's who would let their children be put at such risk - but maybe Mrs. Beatles doesn't mind if the state takes the kids while she is in prison.

[The beatles]

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

  Well, this would explain why he does not want to answer the questions posed in Post #1104.  They would be very uncomfortable to answer if this is just a aiding and abetting tax evasion.

It would also explain a great many other things, like why $100,000 in equity is "irrelevant."  It is irrelevant because it belongs to the tax dodgers, and does not belong to The beatles and his wife at all.

This makes more and more sense and explains The beatles' odd behavior in this thread.

Conspiracy.

People making up lies helps nothing.

[The beatles]

6.) Mrs. Beatles could work nights and weekends but isn't.  If we were in this position I would be working every hour I could when my spouse were home.

Don't forget Mr Beatles won't delivery pizzas either because he can't get in and out of his car that much. Maybe he has a real disability but it sounds like an excuse to me (since he hasn't mentioned a real physical disability).

Actually I did.

You just don't want to bother to read it.

[Malum Prohibitum]

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

  Well, this would explain why he does not want to answer the questions posed in Post #1104.  They would be very uncomfortable to answer if this is just a aiding and abetting tax evasion.

It would also explain a great many other things, like why $100,000 in equity is "irrelevant."  It is irrelevant because it belongs to the tax dodgers, and does not belong to The beatles and his wife at all.

This makes more and more sense and explains The beatles' odd behavior in this thread.

Conspiracy.

People making up lies helps nothing.

People asking for help but not giving the whole story significantly handcuffs those who would like to help.

[larmando]

This would allow them at a later date to return to their "fancy home" once they sort out debt and/or mr. gets a raise. This might be what mrs. counts on, and why she doesn't want to let go of it: if she doesn't they're "temporarily" living in a cheaper place, if she does she becomes "normal" and loses her big mansion with acres of land, and knows she might never be able to get it back.

  The beatles has posted nothing like this about it, in spite of interrogation aimed at getting the complete story.  If that was the explanation, he would have already made it.  It would have been quite simple to say, "We don't own the $100k in equity.  It belongs to my inlaws.  We have an agreement that they will get the house once their issues are worked out."  But he didn't.  Instead it was just, "My wife won't do that to her parents."  Whatever "that" is.

That's not what I meant. I think he thinks they *do* own the 100k, but they are grateful to the inlaws for sitting on it while maintaining it/increasing it by paying the mortgage, and allowing them (the beatles) to go back to it at a later date. Or at least that's part of the framing. I believe neither the inlaws nor the mrs want to get rid of "the family mansion", no matter who lives there. Note that the inlaws already lived somewhere else, while the beatles lived there.

Maybe everybody moving in the mansion could work. After all it's big enough for that. :)

"that" might well be send them to live in a 75k "normal" house *and* selling the family mansion.

[begood]

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

  Well, this would explain why he does not want to answer the questions posed in Post #1104.  They would be very uncomfortable to answer if this is just a aiding and abetting tax evasion.

It would also explain a great many other things, like why $100,000 in equity is "irrelevant."  It is irrelevant because it belongs to the tax dodgers, and does not belong to The beatles and his wife at all.

This makes more and more sense and explains The beatles' odd behavior in this thread.

Conspiracy.

People making up lies helps nothing.

beatles, people aren't making up lies. People are trying to fill in the blanks you are leaving in your responses by positing credible theories. Trust me, we are trying to HELP YOU. We think you are getting shafted by your in-laws. We think your wife doesn't fully understand the situation in which you have found yourself, and we think you are having a hard time waking up to the true awfulness of it all.

[CheapScholar]

I'm a non-practicing JD, but still a law school grad.  I agree that this is some serious stuff.  I could absolutely see the IRS being ruthless with these facts.  It reads like a law school exam.

Beatles, you better get a good CPA/tax lawyer and tell him/her EVERYTHING.  Get a real estate agent and sell these properties ASAP.  If you don't: Best case scenario - you avoid prosecution and financial ruin for a few more years and then probably succumb to bankruptcy and divorce once this all blown up.  Worst case scenario - you go to prison.

[The beatles]

Did I read that they are keeping the rent that comes in from the apartment that has a lease through August? . . . and 3) they're making money off rent on a property they don't even own! How is that fair to YOU, beatles?

  I wonder if they are reporting that income to the IRS???   LOL!  Since they do not own the property they are renting, can they even deduct anything against that income?  I am not an accountant, but I am guessing not.

Yes, that income is reported.

[The beatles]

I would suggest that, Mrs. Beatles' parents do, de facto, own the property.  I'm guessing this is also the understanding of all parties.  The Beatles hold the de jure ownership because otherwise the IRS would take it.  But it is in name only.  Everyone understands this, which is why it isn't the solution to the case study, and why it would result in divorce to suggest stealing her parents' house to Mrs. Beatles.

  Well, this would explain why he does not want to answer the questions posed in Post #1104.  They would be very uncomfortable to answer if this is just a aiding and abetting tax evasion.

It would also explain a great many other things, like why $100,000 in equity is "irrelevant."  It is irrelevant because it belongs to the tax dodgers, and does not belong to The beatles and his wife at all.

This makes more and more sense and explains The beatles' odd behavior in this thread.

Conspiracy.

People making up lies helps nothing.

People asking for help but not giving the whole story significantly handcuffs those who would like to help.

I've told the whole story.

In detail.

People just dont want to read it.

[The beatles]

I'm a non-practicing JD, but still a law school grad.  I agree that this is some serious stuff.  I could absolutely see the IRS being ruthless with these facts.  It reads like a law school exam.

Beatles, you better get a good CPA/tax lawyer and tell him/her EVERYTHING.  Get a real estate agent and sell these properties ASAP.  If you don't: Best case scenario - you avoid prosecution and financial ruin for a few more years and then probably succumb to bankruptcy and divorce once this all blown up.  Worst case scenario - you go to prison.

They already know everything...

My wife's family has an IRS agent who is on his case...

They've been to the house.

They know everything.

There is nothing to hide.

You guys are just MAKING THINGS UP to make it sound juicer than it is.

It's ridiculous.

[former player]

Thing is, beatles, however you and Mrs Beatles are looking at the situation, and however well intentioned you are, the facts as currently presented on this forum could very easily be presented by the IRS in court to make you and Mrs Beatles look as guilty as hell.  And why wouldn't they, when there is nearly a quarter of a million in unpaid taxes hanging around - the inlaws $200k and your $40k, plus whatever they would deem to be your "income" on the payments made by your inlaws and their sub-renters on the mansion.

Please, please, please, this has already gone way beyond any sort of saving face for your inlaws or indulging Mrs Beatles' hopes of future gracious living.

[Tyson]

I would suggest selling everything except the home you live in.  It fixes almost everything in one fell swoop.  Most people in your situation don't have that option.  You should take it.  Obviously your in-laws can't buy a different house, but they should be able to rent somewhere else instead. 

Look how complicated and messed up the rest of your life is due to these 2 properties.  Cut them loose and simplify your life enormously.  The stress of all of this has got to be eating you up.