Two-Year Notice

[bean29]

Aug 8, 2023 10:09:33 GMT -5 Knee Deep in Water Chloe said:

Aug 8, 2023 9:49:52 GMT -5 bean29 said:

I have some thoughts - first - I do think the question of who has been paying the utilities and if they are in your mother's name or your sister's name is valid.  In Wisconsin, if you don't pay your utilities, they cut them off in the summer months.  Problem tenants who don't pay their rent consistently usually don't pay the water and electricity bills on time either.  So, your mother probably has been paying them.

Imho, your sister can't afford to own the house.  If she did own the house, how would she keep up with the maintenance?  I have a friend from grade school that inherited her mother's house.  It is really too big for one person.  She has it crammed with stuff.  I think it has flooded and the roof may leak.  She can't afford the house and would probably be better off in low-income housing.  in order to sell, she would need to get rid of all the stuff she has crammed in there.  She says she has Fibromyalgia, and if true, would be another reason why she is not capable of doing Maintenace.  This person has a job with the school system and is almost 60 years old.  As far as your sister's situation goes, while the low monthly payment looks good, it may not be the best thing for her in the long run.  On the other hand, if she can't get into low-income housing, she will not be able to afford the rents that will be available to her.

We currently have one of my BIL's living in our rental property.  He pays consistently but his rent is below market.  We pay the water, and part of the utilities (complicated property issues).  We should sell next year, we probably won't.

I assume your mother is taking this action because she can't afford to continue paying DS's rent- or she hopes it will cause DS to become more self-sufficient.  

Idk what the best thing to do is, but your mother should make sure that if she has to go to court, her notification is documented properly.  Maybe she should review what she has done with an attorney?

My mother can absolutely afford to continue the current situation. She just doesn't think she should have to support my fully capable sister's housing anymore. She owns the home outright. She wouldn't actually need to even sell it; she could rent it for FMV and have an income stream. At this point, not counting lost FMV-income; I estimate the house is costing her about $2k/year in property taxes and a few thousand in upkeep. 

Do you have to pay taxes on the FMV of the rent, or do you only pay taxes on what BIL pays you in rent? I think my mother is paying taxes on FMV rent and that is definitely annoying her. 

We pay $2823 in property taxes.  The rent paid is income on your tax return, then you deduct your expenses ie. taxes, mortgage interest and utilities etc.

[haapai]

This story makes me want to call my parents and thank them for not letting me live with them when I was 31 and lost my job.  There seems to be something about living rent-free or paying well below market rate that retards a person's financial development.  Not developing that terror of how you're gonna pay the rent and where you are going to live if you don't pay the rent does something to you. 

[mollyanna58]

My sister is not one to make plans.

Your sister's plan may have been to inherit the house.  

My mother moved out of her house and into a new place.  It took a while to fix up and sell the old place. Brother #2 kept asking brother #3 (who was doing the actual work on the house) when it was going to be sold, because he wanted his inheritance.  Brother #3 told him there would be no inheritance when the house sold because Mom is still alive.  

[laterbloomer]

Aug 8, 2023 12:47:03 GMT -5 haapai said:

This story makes me want to call my parents and thank them for not letting me live with them when I was 31 and lost my job.  There seems to be something about living rent-free or paying well below market rate that retards a person's financial development.  Not developing that terror of how you're gonna pay the rent and where you are going to live if you don't pay the rent does something to you. 

I'm not really sure which thing is the cause and which is the effect here. My parent's great niece is pregnant at the age of 20 and her and the baby daddy just moved in with my parents. They previously lived with her parents but for some reason (I suspect her parents don't want a baby in the house) got kicked out. At the age of 20 I would have died at the idea of living under my parents rules again. No matter how lenient they got. I don't think it's their first choice either, they just don't have the skills to support themselves.

[Bonny]

Aug 8, 2023 10:03:50 GMT -5 Knee Deep in Water Chloe said:

Aug 8, 2023 9:26:29 GMT -5 Bonny said:

While logical, I think this idea just muddies the water further and may delay eviction because now the sister has a claim to an inputed down payment. Your mom has made her intentions clear. She's supported your sister long enough. Where's the niece's father? Has he been paying child support?

No biological father in sight since my niece was a year-old. He never paid child support
My sister is actually married; her husband does work full time. 

Wow, I thought your mom was helping out a single mom. I can't imagine your mom's frustration with this situation. It really feels like they are taking advantage of her. Two able bodied adults should be able to figure out how to pay something near fair market value in rent.

[souldoubt]

Aug 8, 2023 13:16:45 GMT -5 Bonny said:

Aug 8, 2023 10:03:50 GMT -5 Knee Deep in Water Chloe said:

No biological father in sight since my niece was a year-old. He never paid child support
My sister is actually married; her husband does work full time. 

Wow, I thought your mom was helping out a single mom. I can't imagine your mom's frustration with this situation. It really feels like they are taking advantage of her. Two able bodied adults should be able to figure out how to pay something near fair market value in rent.

This. I didn’t see that there was another able bodied adult living there who works full time. They haven’t regularly paid rent and the sister apparently didn’t think this deal would end. Makes me wonder where their money goes. The OPs mom is a saint. I realize it isn’t the OPs business but if I were in that situation I would have said something to mom long ago. Not because it impacts her but because mom was being taken advantage of for years.

[raeoflyte]

Originally I was thinking that it would be hard for your mom to enforce since where would your niece and sister live but with a 2nd full time income - plus a 3rd person - I'm guessing your mom will be just fine selling the house.

[raeoflyte]

Aug 8, 2023 12:47:03 GMT -5 haapai said:

This story makes me want to call my parents and thank them for not letting me live with them when I was 31 and lost my job.  There seems to be something about living rent-free or paying well below market rate that retards a person's financial development.  Not developing that terror of how you're gonna pay the rent and where you are going to live if you don't pay the rent does something to you. 

I don't think that's the cause. Plenty of adults have moved back in with their parents or accepted financial help from them and not turned into mooches. Those stories just aren't as entertaining.

[Works4me]

I'm curious: if both your sister and BIL are working, where does their money go?

(And ok, I'll admit it, I'm really bored and nosy!)

[haapai]

Aug 8, 2023 15:16:39 GMT -5 raeoflyte said:

Aug 8, 2023 12:47:03 GMT -5 haapai said:

This story makes me want to call my parents and thank them for not letting me live with them when I was 31 and lost my job.  There seems to be something about living rent-free or paying well below market rate that retards a person's financial development.  Not developing that terror of how you're gonna pay the rent and where you are going to live if you don't pay the rent does something to you. 

I don't think that's the cause. Plenty of adults have moved back in with their parents or accepted financial help from them and not turned into mooches. Those stories just aren't as entertaining.

Sadly, I do not think that I would have become one of those happy, boring stories.  The way that I thought about money was pretty screwed up at that time.  I tended to look at the balance on my ATM receipt to figure out how much I could spend on fun stuff and my idea of budgeting was to set my standard of living low enough that I had a set amount (about $200 a month) left over after I had taken care of everything that I absolutely had to spend money on.  When my income doubled and I was racking up semi-fixed expenses that took me to the same level, that $200 cushion was insanely inadequate. 

I don't think that I would have learned any better while living with my parents.  Even if they had gotten actively involved and not charged me rent but forced me to eliminate my automobile and student loan debt instead, I wouldn't have had a clue what they were trying to do. 

[debthaven]

I’m guessing that your BIL wasn’t yet around when your mother offered your sister this arrangement. It’s crazy that two adults can’t come up with $500 rent/month.

I hope they step up. Partly because if they don’t, and your mom passes, I’m guessing that your sister will insist that it’s “her house”, especially since (I’m assuming) you and your other sister both own their homes. (I know you do, my assumption is that the third sister does too.)

Your mother has been very generous, for many years. It’s normal that she wants to put herself first now. She’s done more than enough for them.

PS She may also be resentful because your mom already paid you for “her” house when your mom purchased it from you all those years ago.

[raeoflyte]

I forgot the part where sis admits to not always paying mom rent.

Dh and I paid $650 rent 25 years ago on $10 an hour jobs. Without a heck of a back story that's crazy that they aren't even paying $500 consistently.

My parents help my dsis quite a bit over the years, but it's when she absolutely needs it. She wants to be functional and independent.

[haapai]

Aug 8, 2023 18:21:53 GMT -5 raeoflyte said:

I forgot the part where sis admits to not always paying mom rent.

Dh and I paid $650 rent 25 years ago on $10 an hour jobs. Without a heck of a back story that's crazy that they aren't even paying $500 consistently.

My parents help my dsis quite a bit over the years, but it's when she absolutely needs it. She wants to be functional and independent.

I think that the answer might be child care.  I've got no experience with paying it, but I've definitely heard of folks paying more for child care than for rent, for one child.  Even though I have never paid it, I get a bit pissy when folks omit it. 

[raeoflyte]

Aug 8, 2023 19:00:27 GMT -5 haapai said:

Aug 8, 2023 18:21:53 GMT -5 raeoflyte said:

I forgot the part where sis admits to not always paying mom rent.

Dh and I paid $650 rent 25 years ago on $10 an hour jobs. Without a heck of a back story that's crazy that they aren't even paying $500 consistently.

My parents help my dsis quite a bit over the years, but it's when she absolutely needs it. She wants to be functional and independent.

I think that the answer might be child care.  I've got no experience with paying it, but I've definitely heard of folks paying more for child care than for rent, for one child.  Even though I have never paid it, I get a bit pissy when folks omit it. 

Fair point till 12, but they have to be at least 3 years past that.

[giramomma]

I have a rising sophmore in HS.

Full time childcare with her would have been something like 1300 a month in a top of the line center.

Once she was school aged, Y camp ran 200/week...for 10 weeks so 2K a year.

Sure afters chool could be needed. We'll say $10/hour, two hours a day. That's $100 a week. Estimating 36 weeks a year, that's 3600.

So, for the 0-5 age bracket, I could buy that childcare would be a thing.

Once the kid is school aged? Childcare would run 6K a year.

Childcare +rent  would be 12K a year.

In 2012, the median HH income was 51K.

We'll say Dear Sister and hubs is putting 3% away for retirement, and spend 10% of their gross on benefits.

That leaves a net of 3600 a month.

Rent and childcare would take 1K. That leaves 2600 a month. 

[Knee Deep in Water Chloe]

Aug 8, 2023 12:33:09 GMT -5 bean29 said:

Aug 8, 2023 10:09:33 GMT -5 Knee Deep in Water Chloe said:

My mother can absolutely afford to continue the current situation. She just doesn't think she should have to support my fully capable sister's housing anymore. She owns the home outright. She wouldn't actually need to even sell it; she could rent it for FMV and have an income stream. At this point, not counting lost FMV-income; I estimate the house is costing her about $2k/year in property taxes and a few thousand in upkeep. 

Do you have to pay taxes on the FMV of the rent, or do you only pay taxes on what BIL pays you in rent? I think my mother is paying taxes on FMV rent and that is definitely annoying her. 

We pay $2823 in property taxes.  The rent paid is income on your tax return, then you deduct your expenses ie. taxes, mortgage interest and utilities etc.

I don't know if it's a state thing, but--and my mother uses my accountant--we have to put in what would be FMV for rent and pay income taxes on FMV even if we're not receiving the full rent. (I don't own a rental anymore, but used to.) So one of the things my sister says my mother said: My mother doesn't want to pay taxes on non-existent money anymore. 

[Knee Deep in Water Chloe]

Aug 8, 2023 12:56:51 GMT -5 mollyanna58 said:

My sister is not one to make plans.

Your sister's plan may have been to inherit the house.  

My mother moved out of her house and into a new place.  It took a while to fix up and sell the old place. Brother #2 kept asking brother #3 (who was doing the actual work on the house) when it was going to be sold, because he wanted his inheritance.  Brother #3 told him there would be no inheritance when the house sold because Mom is still alive.  

I had that thought too--that she was just hoping she'd inherit it before she got kicked out. Our mother--statistically/genetics-wise--has at least 20 years to go.

[Knee Deep in Water Chloe]

Aug 8, 2023 13:08:40 GMT -5 laterbloomer said:

Aug 8, 2023 12:47:03 GMT -5 haapai said:

This story makes me want to call my parents and thank them for not letting me live with them when I was 31 and lost my job.  There seems to be something about living rent-free or paying well below market rate that retards a person's financial development.  Not developing that terror of how you're gonna pay the rent and where you are going to live if you don't pay the rent does something to you. 

I'm not really sure which thing is the cause and which is the effect here. My parent's great niece is pregnant at the age of 20 and her and the baby daddy just moved in with my parents. They previously lived with her parents but for some reason (I suspect her parents don't want a baby in the house) got kicked out. At the age of 20 I would have died at the idea of living under my parents rules again. No matter how lenient they got. I don't think it's their first choice either, they just don't have the skills to support themselves.

Right, for my parents it was completely about their grandchild. My sister left home a week before she turned 17. She didn't have my niece until she was 23. She came home when she was pregnant. The housing arrangement was/is solely due to the pregnancy/almost 16yo. My sister is incredibly intelligent; she is just damned stubborn and has authority issues. For whatever reasons within that stubbornness/not playing by the rules, she just is not fiscally responsible. 

[Knee Deep in Water Chloe]

Aug 8, 2023 13:16:45 GMT -5 Bonny said:

Aug 8, 2023 10:03:50 GMT -5 Knee Deep in Water Chloe said:

No biological father in sight since my niece was a year-old. He never paid child support
My sister is actually married; her husband does work full time. 

Wow, I thought your mom was helping out a single mom. I can't imagine your mom's frustration with this situation. It really feels like they are taking advantage of her. Two able bodied adults should be able to figure out how to pay something near fair market value in rent.

Originally, it was because my sister was single. It's also because my sister living with our parents was untenable for everyone's mental health. It was easier for my parents to just pay for her and my niece to live somewhere than to let them live with our parents. 

Then the a boyfriend came along. He couldn't hold a job. My dad had him do work at my parents' house/property in exchange for the housing expenses. That guy went away; along came the now-husband/my BIL. He's--as far as I know--consistently held a job. Why my mother (after my dad passed) hasn't increased the rent from $500/month is beyond me! 

[Knee Deep in Water Chloe]

Aug 8, 2023 13:20:29 GMT -5 souldoubt said:

Aug 8, 2023 13:16:45 GMT -5 Bonny said:

Wow, I thought your mom was helping out a single mom. I can't imagine your mom's frustration with this situation. It really feels like they are taking advantage of her. Two able bodied adults should be able to figure out how to pay something near fair market value in rent.

This. I didn’t see that there was another able bodied adult living there who works full time. They haven’t regularly paid rent and the sister apparently didn’t think this deal would end. Makes me wonder where their money goes. The OPs mom is a saint. I realize it isn’t the OPs business but if I were in that situation I would have said something to mom long ago. Not because it impacts her but because mom was being taken advantage of for years.

Oh, I think saint is strong word for my mother 
Willing to ensure her grandchildren are housed, fed, clothed, and have reasonable middle class opportunities is definitely what they've done for 25 years. (My older daughter is 25.)

I have a lot of reasons that I don't get along with my mother, and, unless I thought she was actually being fiscally hurt or caused to lower her own cost of living, I wouldn't say anything about what she does for my sisters. Though it's been since 2007 since I asked them for financial support, I assume my sisters have not asked about me. 

[Knee Deep in Water Chloe]

Aug 8, 2023 15:57:25 GMT -5 Works4me said:

I'm curious: if both your sister and BIL are working, where does their money go?

(And ok, I'll admit it, I'm really bored and nosy!)

Oh, I'm wondering the same thing!

[Knee Deep in Water Chloe]

Aug 8, 2023 18:03:53 GMT -5 debthaven said:

I’m guessing that your BIL wasn’t yet around when your mother offered your sister this arrangement. It’s crazy that two adults can’t come up with $500 rent/month.

I hope they step up. Partly because if they don’t, and your mom passes, I’m guessing that your sister will insist that it’s “her house”, especially since (I’m assuming) you and your other sister both own their homes. (I know you do, my assumption is that the third sister does too.)

Your mother has been very generous, for many years. It’s normal that she wants to put herself first now. She’s done more than enough for them.

PS She may also be resentful because your mom already paid you for “her” house when your mom purchased it from you all those years ago.

I do think that she (that sister) would get the house in which she's living. I don't know that I'd fight too much about that. There's other money, and I don't think I'd let all of it go. 

I don't know if my sister realizes that I didn't get any money out of my parents buying that house from me. All it allowed was for me to not have to foreclose on it. I'd hope that she'd logically understand that after 15 years, living there for $500/month has gotten her way more out of it than I ever did. But, as indicated by this entire situation, she's not logical about money. 

[Bonny]

Aug 9, 2023 8:57:20 GMT -5 Knee Deep in Water Chloe said:

Aug 8, 2023 18:03:53 GMT -5 debthaven said:

I’m guessing that your BIL wasn’t yet around when your mother offered your sister this arrangement. It’s crazy that two adults can’t come up with $500 rent/month.

I hope they step up. Partly because if they don’t, and your mom passes, I’m guessing that your sister will insist that it’s “her house”, especially since (I’m assuming) you and your other sister both own their homes. (I know you do, my assumption is that the third sister does too.)

Your mother has been very generous, for many years. It’s normal that she wants to put herself first now. She’s done more than enough for them.

PS She may also be resentful because your mom already paid you for “her” house when your mom purchased it from you all those years ago.

I do think that she (that sister) would get the house in which she's living. I don't know that I'd fight too much about that. There's other money, and I don't think I'd let all of it go. 

I don't know if my sister realizes that I didn't get any money out of my parents buying that house from me. All it allowed was for me to not have to foreclose on it. I'd hope that she'd logically understand that after 15 years, living there for $500/month has gotten her way more out of it than I ever did. But, as indicated by this entire situation, she's not logical about money. 

Sibling rivalry can be a terrible thing. What one perceives another sibling got can be completely wrong when one looks at the facts. Unfortunately, the situation can get really ugly once the parent(s) pass. Sorry Chloe 

[skeeter]

Aug 9, 2023 8:40:46 GMT -5 Knee Deep in Water Chloe said:

Aug 8, 2023 12:33:09 GMT -5 bean29 said:

We pay $2823 in property taxes.  The rent paid is income on your tax return, then you deduct your expenses ie. taxes, mortgage interest and utilities etc.

I don't know if it's a state thing, but--and my mother uses my accountant--we have to put in what would be FMV for rent and pay income taxes on FMV even if we're not receiving the full rent. (I don't own a rental anymore, but used to.) So one of the things my sister says my mother said: My mother doesn't want to pay taxes on non-existent money anymore. 

Rental income goes on the federal return and also most states.  The accountant for you and your mom is doing it correctly.  Federal rules make you use FMV when renting to family members as they assume family is getting charged less than a "stranger".  Rental income from non-family members is listed as what is actually paid.

[laterbloomer]

Aug 9, 2023 10:25:00 GMT -5 skeeter said:

Aug 9, 2023 8:40:46 GMT -5 Knee Deep in Water Chloe said:

I don't know if it's a state thing, but--and my mother uses my accountant--we have to put in what would be FMV for rent and pay income taxes on FMV even if we're not receiving the full rent. (I don't own a rental anymore, but used to.) So one of the things my sister says my mother said: My mother doesn't want to pay taxes on non-existent money anymore. 

Rental income goes on the federal return and also most states.  The accountant for you and your mom is doing it correctly.  Federal rules make you use FMV when renting to family members as they assume family is getting charged less than a "stranger".  Rental income from non-family members is listed as what is actually paid.

Do you have to actually report any rent from family members? Can't you be housing them rent free and they just cover their expenses?

[swamp]

Aug 8, 2023 12:47:03 GMT -5 haapai said:

This story makes me want to call my parents and thank them for not letting me live with them when I was 31 and lost my job.  There seems to be something about living rent-free or paying well below market rate that retards a person's financial development.  Not developing that terror of how you're gonna pay the rent and where you are going to live if you don't pay the rent does something to you. 

Meh 

I lived with my parents until i was 30 and bought a house so I could get my student loans under control.   

I think I turned out OK. 

[haapai]

Aug 9, 2023 11:10:27 GMT -5 swamp said:

Aug 8, 2023 12:47:03 GMT -5 haapai said:

This story makes me want to call my parents and thank them for not letting me live with them when I was 31 and lost my job.  There seems to be something about living rent-free or paying well below market rate that retards a person's financial development.  Not developing that terror of how you're gonna pay the rent and where you are going to live if you don't pay the rent does something to you. 

Meh 

I lived with my parents until i was 30 and bought a house so I could get my student loans under control.   

I think I turned out OK. 

I think you did too.  Even though that first sentence is one hot mess. 

[jeffreymo]

This situation sounds somewhat similar to my sister and her family. My parents have always subsidized them in some way so that the grandkids could be comfortable. I think it has had an effect on my sister and BIL that they’ll never recover from. When the grandkids become adults or my parents pass, the well will run dry, and I’m concerned how that’s going to play out. They will be upper 40’s by that point with over 20 years of getting handouts and not having to adjust to real world economics.

[alabamagal]

My parents are in similar situation with my broth and SIL, brother is 52, SIL a few years younger with 2 teens. My parents are 84 and 83 and in comfortable financial situation and trying to separate financially from supporting my brother. My brother got caught up in housing issues in 2008 or so and lost previous housing to foreclosure. My parents bought a house for them to live in for about $200k and they have been paying rent to cover mortgage since then. Parents are now trying to sell the house to them for the mortgage amount of $150k for the last 2 years but they have been dragging their feet (per my mom). The issue is they don’t have steady income for mortgage qualification as they are both self employed. My brother works hard and pretty steady income but SIL is a long story. House is now worth $400k so they can get no income verification loan.

Family and money entanglement is tricky. I’m not sure how my parents will handle their inheritance. They have been gifting me money yearly, but small amounts considering their total net worth. Not sure if the rental house gift to brother will factor into their estate plan. And don’t really care.

[raeoflyte]

Aug 10, 2023 5:27:08 GMT -5 alabamagal said:

My parents are in similar situation with my broth and SIL, brother is 52, SIL a few years younger with 2 teens. My parents are 84 and 83 and in comfortable financial situation and trying to separate financially from supporting my brother. My brother got caught up in housing issues in 2008 or so and lost previous housing to foreclosure. My parents bought a house for them to live in for about $200k and they have been paying rent to cover mortgage since then. Parents are now trying to sell the house to them for the mortgage amount of $150k for the last 2 years but they have been dragging their feet (per my mom). The issue is they don’t have steady income for mortgage qualification as they are both self employed. My brother works hard and pretty steady income but SIL is a long story. House is now worth $400k so they can get no income verification loan.

Family and money entanglement is tricky. I’m not sure how my parents will handle their inheritance. They have been gifting me money yearly, but small amounts considering their total net worth. Not sure if the rental house gift to brother will factor into their estate plan. And don’t really care.

Just FYI, I don't think there are truly no income doc loans anymore. At least not ones with standard mortgage terms. There are bank statement loans that use your bank statement deposits to show you have the income coming in to make the payments and asset loans that use your total assets as an income source to qualify you for the loan. If it was an investment they could use rental income from the subject property which might mean they don't need any outside income to qualify.

But I don't know of any lenders doing actual stated, no ratio, or no doc loans like they were in the early aughts.