Folks, my mother in laws husband passed away and my MIL has requested that I purchase a property for her to live in (with fair rent)
Item 1
May I legally reduce the rent rate (in Indiana) by the rate I would be taxed at and have her live as family rather than tennent - having her gift the money over.
I understand I'll lose the ability to use that units 2 year history cash flow as an income source to qualify for future investment property loans.
Item 2
If I buy a duplex to live in the adjoined unit, I can qualify for an FHA today without having to sell my current home (skipping the whole contingency shuffle). I would likely then put my current house on the market (as it's below 1% rule) rather than rent for just above break even. That home is at 80% ltv, so after selling fees would NOT have enough to refi pricier duplex down to 80% and would instead toss money into VTI.
Technically I could do 20% down but I'd need to liquidate most of my traditional IRA and take all those nasty tax hits. Not worth it.
Item 3
If MIL wants to remodel her unit, do I need to mark improvements she makes on her dime as income?
Thanks crew!