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Buy the old folks’ home, lease it back to them for savings

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in Leaders & Managers,Management Training,Small Business Tax,Small Business Tax Deduction Strategies

If their mortgage is paid off — or close to it — your parents or in-laws can’t squeeze much tax juice from their home other than property-tax deductions. And even those deductions are of limited value to elderly parents in a low tax bracket.

In fact, if your parents claim the standard deduction instead of itemizing, they get no income tax benefit at all from home ownership.

Strategy: Consider buying your parents’ home. Then, lease it back to them at the going rate. That way, they can tap into the built-up home equity without moving away.

And you’re able to reap the tax rewards of renting the house.

For starters, the sale can put some much-needed cash into your parents’ pockets. And little or no income tax will be due on the sale, thanks to the giant home-sale exclusion. The tax law allows an individual to exclude tax on the first $250,000 of gain from the sale of a principal residence; $500,000 for a married coupl...(register to read more)

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