paying off my parent\'s mortgage..help needed
 

its currently at 50k left on their mortgage. Can i jsut write them a check for 50k or will this incur 'gift tax'? please help.

Re: paying off my parent\'s mortgage..help needed
 

Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

Re: paying off my parent\'s mortgage..help needed
 

A friend did this once. He wrote it up as a long term loan to be paid back when they had the means. It was a simple one page write up that his parents and he signed. The intention all along was that he'd never be paid back. But he thought he'd be covering his butt if he did it that way. I dunno on that either way though.

Re: paying off my parent\'s mortgage..help needed
 

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its currently at 50k left on their mortgage. Can i jsut write them a check for 50k or will this incur 'gift tax'? please help.

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i believe it would but ive been out of that part of the finances loop for about a year. Only 10k would go towards gift if i remember right...the rest is taxed...

there are other ways around it

Re: paying off my parent\'s mortgage..help needed
 

Why not just write the check to the mortgage company?

Is paying a bill for a parent really considered a gift? (yes, I'm asking)

Re: paying off my parent\'s mortgage..help needed
 

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Why not just write the check to the mortgage company?

Is paying a bill for a parent really considered a gift? (yes, I'm asking)

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if ur audited for some dumb reason the IRS can make anything into anything...if u write it to the morgage co its easier than getting around giving it to your parents, there r some ways of doing this that u get a tax break in the whole sum like say if you "invest" in thier home - joint own it/etc. There is too much to type here

Re: paying off my parent\'s mortgage..help needed
 

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Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

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the thing is that my mom is simple folk and i want to help her out financially, but she isnt really crazy about anyhting, and really loves her 450/wk daycare job.

her intestest rate is 6.5%, do you still think its better to pay monthly and invest, or to pay it off as a whole.

obviously, she is for the latter, being simple folk.

Re: paying off my parent\'s mortgage..help needed
 

Isnt the USA, land of the free, the greatest country on Earth...

what a land where you have to pay a tax to give your money that has already been taxed to someone else.

Re: paying off my parent\'s mortgage..help needed
 

Under the current estate and gift tax regime, you have and exclusion of 1.5 million. (It will increase to 2 million in '06,'07 and '08 and 3.5 million in '09) You will not have to pay any taxes on the 50k, but you still have to file. 28k will be deducted from your 1.5 million exclusion amount(You get an annual 11k per donee exemption).

You could get 44k to them w/o having any tax consequences at all by giving 11k each to both your mother and father on both Dec. 31 of this year and Jan. 1 of next year.

Re: paying off my parent\'s mortgage..help needed
 

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Isnt the USA, land of the free, the greatest country on Earth...

what a land where you have to pay a tax to give your money that has already been taxed to someone else.

[/ QUOTE ]

dont even get me going on this...i have money thats been taxed THREEEEEEE times....and gift tax...land appreciate type taxes and inheritence r what i hate with a PASSION

Re: paying off my parent\'s mortgage..help needed
 

I think the tax-free gift amount is $11k now, so you should be able to pay it off over the next 5 years. If you want to do it faster, then all you have to do is figure out if its worth as much as the tax.

As a side note, it seems like you've always got a ton of financial questions and a ton of cash. You should seriously think about hiring a financial advisor. Even if its just a one-time thing, they could probably set you up with some good plans and teach you a lot.

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
Under the current estate and gift tax regime, you have and exclusion of 1.5 million. (It will increase to 2 million in '06,'07 and '08 and 3.5 million in '09) You will not have to pay any taxes on the 50k, but you still have to file. 28k will be deducted from your 1.5 million exclusion amount(You get an annual 11k per donee exemption).

You could get 44k to them w/o having any tax consequences at all by giving 11k each to both your mother and father on both Dec. 31 of this year and Jan. 1 of next year.

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THANK GOD!!! i love u!!! someone who knows thier stuff!! I was beginning to think i was alone in my lil finance world...glad u had exact #s for him...i had heard it increased from 10k and was sure it was still right around it but i didnt know plus its 11am and i havent slept yet


PS: to the org poster...ur a sweetheart for helping ur parents like that

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
Under the current estate and gift tax regime, you have and exclusion of 1.5 million. (It will increase to 2 million in '06,'07 and '08 and 3.5 million in '09) You will not have to pay any taxes on the 50k, but you still have to file. 28k will be deducted from your 1.5 million exclusion amount(You get an annual 11k per donee exemption).

You could get 44k to them w/o having any tax consequences at all by giving 11k each to both your mother and father on both Dec. 31 of this year and Jan. 1 of next year.

[/ QUOTE ]

I think that's the best way. Make payments through the rest of the year, then give them the remaining 40 some thousand in the fashion described above. 2 days that are technically in 2 different years, and as 4 separate "gifts", with no tax problems.

Re: paying off my parent\'s mortgage..help needed
 

this is a good idea, unforchantly i live overseas. when i come back to the states for xmas ill look into this.

Re: paying off my parent\'s mortgage..help needed
 

pay it off 10k a year at a time.

Re: paying off my parent\'s mortgage..help needed
 

I knew you were overseas. Obviously its best to meet face-to-face, but any good financial advisor should have no problem working over the phone as well.

Before you come back, do a little reading on FAs, what they do, and what to look for in one. Then maybe you can find one you like while you're over here and maintain a relationship from Thailand. As a general rule, stay away from commission-based advisors and find a fee-only firm.

Re: paying off my parent\'s mortgage..help needed
 

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its currently at 50k left on their mortgage. Can i jsut write them a check for 50k or will this incur 'gift tax'? please help.

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Oh my God. Your parents had you almost 20 years before being close to paying off their mortgage? What selfish assholes.

Re: paying off my parent\'s mortgage..help needed
 

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[ QUOTE ]
its currently at 50k left on their mortgage. Can i jsut write them a check for 50k or will this incur 'gift tax'? please help.

[/ QUOTE ]

Oh my God. Your parents had you almost 20 years before being close to paying off their mortgage? What selfish assholes.

[/ QUOTE ]

Ok, that was the 'in your face' of the year...

nc

Re: paying off my parent\'s mortgage..help needed
 

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Isnt the USA, land of the free, the greatest country on Earth...

what a land where you have to pay a tax to give your money that has already been taxed to someone else.

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It's even worse in Canada if you work abroad and bring money back here.

Anyways, never thought I'd actually commend you for something but I do here. You're an ass, but at least your heart is in the right place.

My only suggestion is that if you want to save on taxes, just help your parents pay it off slowly. If the taxes incurred are greater than the cummulative interest, then it wouldn't be wise to pay it all off at once.

Lawrence

Re: paying off my parent\'s mortgage..help needed
 

Have them make a neteller account, transfer through neteller, don't tell the government [censored]. [img]/images/graemlins/smile.gif[/img]

There might be something I'm missing here, though.

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

[/ QUOTE ]

Re: paying off my parent\'s mortgage..help needed
 

her intestest rate is 6.5%, do you still think its better to pay monthly and invest, or to pay it off as a whole.

the stock market has returned 10% annually (on average) since the 30's. by paying off the entire 50k, you restrcit yourself from investing that 50k (oppurtunity cost) while it doesnt probably matter to you right now, it should. one of the best ways to build wealth is to have your money working for you, and not the other way around.

honestly, a mortgage is one of the best things to have. the old school thinking that mortgages needed to be paid off come from the long dark days ago when a bank could call in the note on your house at will. fortunatly there are laws that protect against this now (making a mortgage a risk free loan).

there are other advanteges, but since that wasnt your original question, ill leave it to you to look into it further.

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
her intestest rate is 6.5%, do you still think its better to pay monthly and invest, or to pay it off as a whole.

the stock market has returned 10% annually (on average) since the 30's. by paying off the entire 50k, you restrcit yourself from investing that 50k (oppurtunity cost) while it doesnt probably matter to you right now, it should. one of the best ways to build wealth is to have your money working for you, and not the other way around.

honestly, a mortgage is one of the best things to have. the old school thinking that mortgages needed to be paid off come from the long dark days ago when a bank could call in the note on your house at will. fortunatly there are laws that protect against this now (making a mortgage a risk free loan).

there are other advanteges, but since that wasnt your original question, ill leave it to you to look into it further.

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if you ever look at at how a mortgage is paid off (you can use the mortgage calculator at bankrate.com) you know that on the back end of the loan you're primarily paying the principal w/ little interest. the bank front loads all the interest in the early years. so that 6.5% interest rate was really paid for in the early years.

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
[ QUOTE ]
Isnt the USA, land of the free, the greatest country on Earth...

what a land where you have to pay a tax to give your money that has already been taxed to someone else.

[/ QUOTE ]

dont even get me going on this...i have money thats been taxed THREEEEEEE times....and gift tax...land appreciate type taxes and inheritence r what i hate with a PASSION

[/ QUOTE ]

OMG the government is so lame. You had the foresight to be born into a rich family and this is how they treat you?? Unbelievable.

Do NOT hire a financial advisor.....
 

...Unless they are wealthy beyond belief. You are better off listening to those who are actually doing what they preach.

"Hear and take advice from those whom you aspire to be like. Ignore everyone else."


As far as the mortgage is concerned, your first step is to have your mom put you on the deed and start making payments for her.

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
the thing is that my mom is simple folk and i want to help her out financially, but she isnt really crazy about anyhting, and really loves her 450/wk daycare job.

her intestest rate is 6.5%, do you still think its better to pay monthly and invest, or to pay it off as a whole.

obviously, she is for the latter, being simple folk.

[/ QUOTE ]

Ah. I understand. Peace of mind for the folks is probably worth the incremental opportunity cost.

Re: paying off my parent\'s mortgage..help needed
 

can you buy the house off of them or something?

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
[ QUOTE ]
its currently at 50k left on their mortgage. Can i jsut write them a check for 50k or will this incur 'gift tax'? please help.

[/ QUOTE ]

Oh my God. Your parents had you almost 20 years before being close to paying off their mortgage? What selfish assholes.

[/ QUOTE ]

good post

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
Under the current estate and gift tax regime, you have and exclusion of 1.5 million. (It will increase to 2 million in '06,'07 and '08 and 3.5 million in '09) You will not have to pay any taxes on the 50k, but you still have to file. 28k will be deducted from your 1.5 million exclusion amount(You get an annual 11k per donee exemption).

You could get 44k to them w/o having any tax consequences at all by giving 11k each to both your mother and father on both Dec. 31 of this year and Jan. 1 of next year.

[/ QUOTE ]

This is the correct answer. The 44k idea is a good one too.

Re: paying off my parent\'s mortgage..help needed
 

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Have them make a neteller account, transfer through neteller, don't tell the government [censored]. [img]/images/graemlins/smile.gif[/img]

There might be something I'm missing here, though.

[/ QUOTE ]


they still make u claim it...there r sections for claiming stuff like this (ie. off shore accounts, etc) and if they find out u fibbed ur in big trouble!

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
Under the current estate and gift tax regime, you have and exclusion of 1.5 million. (It will increase to 2 million in '06,'07 and '08 and 3.5 million in '09) You will not have to pay any taxes on the 50k, but you still have to file. 28k will be deducted from your 1.5 million exclusion amount(You get an annual 11k per donee exemption).

You could get 44k to them w/o having any tax consequences at all by giving 11k each to both your mother and father on both Dec. 31 of this year and Jan. 1 of next year.

[/ QUOTE ]

can you elaborate on what exclusion of 1.5 million means?

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
[ QUOTE ]
its currently at 50k left on their mortgage. Can i jsut write them a check for 50k or will this incur 'gift tax'? please help.

[/ QUOTE ]

Oh my God. Your parents had you almost 20 years before being close to paying off their mortgage? What selfish assholes.

[/ QUOTE ]

Hi Giant Dick-Hole,

I never said that unwealthy parents having children are selfish. Others took that line, I did not. I didnt say that you need to be wealthy to provide for them, I said I want to be wealthy so I can both provide for them, and still enjoy my own life without being bogged down in bill mentality.

[censored] you.

Re: paying off my parent\'s mortgage..help needed
 

paying off a mortgage is a bad idea. put yourself on title, make the payments for them, you'll have the write off and still have the cash flow to make better financial decisions as opportunities arise. unless 50k is nothing to you this is probably the best route.

Re: paying off my parent\'s mortgage..help needed
 

Paying it off now is far better than paying it off over time. Your mother will sleep better in a house that is paid for.

Also, the truly wealthy people in america don't have debt (or very much debt). Read a book called "The Millionaire Next Door".

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
[ QUOTE ]
Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

[/ QUOTE ]

[/ QUOTE ]

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
[ QUOTE ]
Under the current estate and gift tax regime, you have and exclusion of 1.5 million. (It will increase to 2 million in '06,'07 and '08 and 3.5 million in '09) You will not have to pay any taxes on the 50k, but you still have to file. 28k will be deducted from your 1.5 million exclusion amount(You get an annual 11k per donee exemption).

You could get 44k to them w/o having any tax consequences at all by giving 11k each to both your mother and father on both Dec. 31 of this year and Jan. 1 of next year.

[/ QUOTE ]

can you elaborate on what exclusion of 1.5 million means?

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It means you can give (or when you die, devise) up to 1.5 million without having any Federal Estate/Gift tax due on the transaction. Technically, it's a credit that's equal to the amount of tax that would be due on a 1.5 million gift/estate (somewhere around 475k IIRC). Whenever you make a gift exceeding 11k, the excess is deducted from your exclusion. The estate and gift taxes are unified, so if you give 750k in gifts during your life and die with a 1 million dollar estate, 250k will be taxed (the amount over the 1.5mil exclusion)

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
Paying it off now is far better than paying it off over time. Your mother will sleep better in a house that is paid for.

Also, the truly wealthy people in america don't have debt (or very much debt). Read a book called "The Millionaire Next Door".

[/ QUOTE ]

I have never read that book, and if this is some sort of philosophical wealth you're referring to than forget this post, but to insist that most wealthy people pay for everything in cash is just not true.

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
[ QUOTE ]
her intestest rate is 6.5%, do you still think its better to pay monthly and invest, or to pay it off as a whole.

the stock market has returned 10% annually (on average) since the 30's. by paying off the entire 50k, you restrcit yourself from investing that 50k (oppurtunity cost) while it doesnt probably matter to you right now, it should. one of the best ways to build wealth is to have your money working for you, and not the other way around.

honestly, a mortgage is one of the best things to have. the old school thinking that mortgages needed to be paid off come from the long dark days ago when a bank could call in the note on your house at will. fortunatly there are laws that protect against this now (making a mortgage a risk free loan).

there are other advanteges, but since that wasnt your original question, ill leave it to you to look into it further.

[/ QUOTE ]

if you ever look at at how a mortgage is paid off (you can use the mortgage calculator at bankrate.com) you know that on the back end of the loan you're primarily paying the principal w/ little interest. the bank front loads all the interest in the early years. so that 6.5% interest rate was really paid for in the early years.

[/ QUOTE ]

I'm not sure what you mean by this, but it's an incorrect sentiment. This home loan continues to accumulate interest on the remaining principal at an annual rate of 6.5% throughout it's entire life. You seem to be referring to the old car loans (which may still exist) that front loaded the interest payments, so that if they ever repossessed your car, you had little equity. Those made no sense to pay off early.

Re: paying off my parent\'s mortgage..help needed
 

Paying it off now is far better than paying it off over time. Your mother will sleep better in a house that is paid for.

nonsense. i doubt his mother sits up at night worrying about the state of her mortgage. as a matter of fact, i am sure she worries about her son's future more. taking 50k and paying off a 'good' loan will cost him the chance to invest that money and reap the benefits of compound interest.

despite the reasons already mentioned, here are a few more points in favor of owning a mortgae on a home:

most are fixed rate, yet inflation usually gives us a raise. so whilst your per year earnings increase year after year, the loan payments dont.

the fact that while the bank holds a note on the house, the owner is the one reaping the benefits of the land/property growing in value.

tax benefits

etc...........

personally, i hope to never fully pay off my home (when i buy one). the economics of america today suggest a mortgage is a powerful thing to have.

Also, the truly wealthy people in america don't have debt (or very much debt). Read a book called "The Millionaire Next Door".

I have read that book. It was a few years ago, but if I recall correctly it was mostly based on how some families in America were very frugal and as a result became modestly wealthy. most of what they constantly preached were spending within your means and saving/investing lots of money. the advice given in the book, was loose but basically common sense. dont carry 'bad debt' (credit cards, vehicles etc). a mortgage is an entirely different beast.

Re: paying off my parent\'s mortgage..help needed
 

[ QUOTE ]
[ QUOTE ]
Under the current estate and gift tax regime, you have and exclusion of 1.5 million. (It will increase to 2 million in '06,'07 and '08 and 3.5 million in '09) You will not have to pay any taxes on the 50k, but you still have to file. 28k will be deducted from your 1.5 million exclusion amount(You get an annual 11k per donee exemption).

You could get 44k to them w/o having any tax consequences at all by giving 11k each to both your mother and father on both Dec. 31 of this year and Jan. 1 of next year.

[/ QUOTE ]

can you elaborate on what exclusion of 1.5 million means?

[/ QUOTE ]

in inheritance it means that the estate can be of that value and it is given to said benificiaries without taxing, but when it reaches over that limit or set limit of that year u have to pay massive taxes...welcome to my world. After 2010 policies change again (Bush upped the limits for us for now, they used to be only 1 million) hahha my mom jokingly says she is going to walk out in front of a bus before 2010 if shes not dead already!

This is why some poeple "gift" out estate...say in a farm...to children and grandchildren at 10k well now 11k a year in order to avoid the taxation of this money again through inheritence tax, otherwise it is a nightmare, but of course with larger estates this 11k limit a year doesnt make much of a dent. In my opinion it kills the bottom upper class (those with say 3 million or so in assets) its just pure wrong...those below u wont owe the "death" tax...those above u have the change to spare...and its alot easier to be worth 3 to 5 million now days than most people think...the limits should be raised even further

but this is a generalized simple way of explaining it...im sure some of the finance people can get more technical.