Selling home to offspring has its benefits

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

SCIN. No, it's not the stuff that covers our body. It's a highly complex legal and financial transaction that may be of interest to elderly homeowners. SCIN stands for "self-cancelling installment note." Let's take this example: Your parents own their house but their financial situation makes it difficult to maintain the house. You are prepared to buy the house and rent it back to your parents, but because you currently have your own house, you are unable to qualify for another mortgage loan. Your parents purchased the house back in the 1960s for $30,000, and it is now worth $600,000. Over the years, they have made approximately $100,000 in improvements. They are eligible for the up-to-$500,000 exclusion of gain, because they file a joint tax return and have owned and lived in the house for a very long time. When they sell the house -- to you or anyone -- they will not have to pay any capital gains tax, as $600,000 (sales price) minus $130,000 (cost basis) equals $...