Purchasing Parents’ Home.

[Karen Johnson]

Hello,

My husband and I are planning on purchasing his parents' home and renting it out. The home in its current condition would sell for roughly $325K on the open market. His parents are planning to sell it to us for roughly $150K. To be clear, they are fully aware of the value of their home and have well defined reasons why they want to sell it to us instead, so we are not taking advantage of them. The sales price is based on the payoff amount for their existing HELOC. The house will also cash flow very well as a rental at this price point. Our plan is to get a conventional mortgage for the purchase with 20 to 25 percent down, since we don't have $150k cash on hand.

I think my question is, what is the best way to move forward given the parameters of the purchase? Should we be consulting a CPA or other professional with regard to any tax (or legal) ramifications for them and for us? It’s not our first deal so we are clear on the general requirements/process for purchasing a house in general, but it is our first purchase from family which requires us to get a mortgage. We just want to make sure we aren’t missing anything or making any missteps that will negatively affect them or us. Our plan had been to visit a CPA but we decided to also ask the community here first since there is a wealth of knowledge and experience here. Any advice on this is welcomed. 

Thanks.