Here is another true story about a senior I just talked to. She is in her late 60's and she would like to repair her home so when she dies and her son sells it he gets more for it. (She later mentioned that the buyer will more than likely tear it down because the value was in the land). She wants him to have more money so he can buy a place where he lives and is currently renting because he can't afford to buy. We agreed that she would live at least 20 more years and once she was gone he could sell the house and buy his house. Now lets say rent was ohh --$800/mo (cheap rent where he lives) and assuming rent never increases - he will have put $192,000 toward renting. If mom gives him $100,000 not to put a nice down payment on his new home - his rent would probably pay a mortgage. So if the house he bought was $300,000 and his house increase 32% (we figured that was how his moms house appreciated) his $300,000 house would be worth at least $396,000. So he would have $396,000 asset and maybe a $170,000 debt in 20 years. But the real benefit is that mom would have been able to visit her son in the house she helped buy. Is she doing her son a favor by giving him a little more when she dies? Its hard to be logical when you are dealing with something as emotional as your house. I understand, but its sad really.
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