Taxes, Mortgages and Taking care of your old folks

[MasterMyMoneyMinions]

Hey everyone,

Quick question on taxes. My wife and I will be looking to buy a home this year. We are mid 20s, early Mustachians and are hoping to consolidate family money. My parents are looking to sell their house and move in with us in our new house. We have not bought anything yet. Tax wise what is the best way to use their money towards my mortgage (Mortgage will only be in my name, wife just moved to this country). House we are looking at is $275k. Their house will sell for around $130k. Right now the only way I can think of is an annual 14k gift to me and my wife to total 28k per year. However, is there a way to have them add all of their money from the sale to my mortgage at once without getting a hefty tax penalty?

Side note we might also take my grandmother out of a nursing home and take care of her at my house as well. My parents will put the money they were supporting her ($1500 month) towards my house as well.

Thanks!

[maizefolk]

It would just count towards the lifetime gift exemption. A bit more paperwork but no tax bill as far as I know. Until your parents expect to leave $10.9M or more in their estate when they die, won't produce any taxes later either. Before you even had to do paperwork, it may well be possible for each of your parents to give $14,000 each to you and to your wife (so $56,000 total transferred between the two married couples in a single year without stating to use any of the $11M lifetime limit.*).

Are you comfortable with the situation you're getting yourself into? Three generations under one roof, technically all in your name. Lots of money changing hands, presumably with lots of implied conditions and expectations. None of my business either way.

*http://www.elderlawanswers.com/will-you-owe-a-gift-tax-this-year-6069

[MasterMyMoneyMinions]

Thanks for the response and reference link. Pretty much answers my question fully. Yea the whole under one roof is still in early stages of discussion but my wife is Asian and has the same setup back home and my parents are often visiting my other siblings or traveling so its just an idea at this point.