Should You Buy Your Elderly Parents’ House?

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There are many things to consider with aging parents. Healthcare, finances, assisted living facilities, and home care aides are probably at the forefront of critical decisions to make. However, another issue often arises of whether or not to buy your elderly parents’ house.

You should buy your elderly parents’ house if it’s financially feasible for both you and your parents. Or if you’re in a position to be the homeowner of that specific property, and it wouldn’t cause a rift between you and other family members, you should buy it.

This article will explore four major considerations to help you decide whether or not buying your elderly parents’ house is the right move. I’ll discuss some pros and cons, several questions to ask yourself to help navigate the decision, and how it will impact various aspects of your life.

How To Decide Whether You Should Buy Your Elderly Parents’ House

You more than likely already know the condition and history of your parents’ house and whether or not it’s located in an established neighborhood, which is a great advantage. Many home purchases come with unwanted surprises that new homeowners don’t learn about until after they move in.

Buying a house under any circumstance is always a huge decision and never easy to make, but buying the home of your aging parents comes with even more things to consider. Let’s take a look at four major considerations.

Financial Considerations

Like buying any house, four financial questions should be answered.

Is the Home Updated?

Older homes typically require more repairs and upkeep. If your parents have been neglectful to address these issues because of health or financial reasons, they will become your problem as soon as you take ownership.

A home is considered updated if recent improvements meet current market expectations.

The overall look and utility of the update should be a modernized improvement from what it was. If nothing has been done for a while, it can get very costly. Rocket Mortgage estimates that a complete home renovation can cost between $15,000 – $200,000.

This chart shows the average cost to repair or remodel common areas of a house:

*Kitchen*	$12,000 – $33,000
*Master Bathroom*	$18,000
*Roof Replacement*	$5,500 – $11,000
*New Flooring*	$3,000 per 500 sq feet
*New Carpet*	$1 -$4 per sq ft
*Garage Door Replacement*	$3,900
*New Siding*	$2 – $50 per sq ft
*Repave Driveway*	$2,800 – $9,600 for a 400 sq ft driveway
*Fresh Interior Paint*	$3,500 – $10,500
*New Windows*	$180 – $2,100

As you can see, these expenses can add up quickly, but if multiple issues in the home need to be addressed, it can add up even more quickly. Keep in mind these are national average costs. How much you spend will depend on the job size, the specific materials you use, and the cost of contracting labor in your area.

Is the Home Overpriced?

A home is overpriced if it’s over the cost of similar properties in the area.

Money can sometimes be a delicate subject to bring up among family members. However, with such a large purchase, it’s important the house price is realistic for the neighborhood and overall condition it’s in.

Often, parents may want to sell their house to their children for below the market price. Although this is perfectly legal, it comes with some complications both parties should be aware of.

Selling a house below the fair market value is considered a gift of equity and needs to be reported to the IRS. The IRS allows gifts up to $15,000 without paying a gift tax, but anything above that will get taxed.

For example, if your parents want to sell you their house for $100,000 less than what it’s appraised for, they will have to pay a gift tax for the additional $85,000 of equity. The good news is that the gift of equity can then be applied toward the down payment instead of cash.

Can You Afford It?

This sounds like a simple enough question. However, because you’re dealing with the house of your elderly parents, your sense of responsibility for them and even emotions can get in the way of making an otherwise straightforward financial decision.

Generally, housing expenses should not exceed 28% of your monthly income. NerdWallet has a great mortgage income calculator to determine how much house you can afford. The key is to not over-leverage yourself.

Having elderly parents can come with enough stress to avoid putting financial strain into the mix.

Should You Wait To Inherit It?

Sometimes it makes more sense to not purchase your elderly parents’ house and simply wait to inherit it whenever the time comes. The chart below shows the 17 states, along with Washington D.C., that have either an estate or inheritance tax:

State	Tax Type	Percentage On Estate/Inheritance Value
Connecticut	Estate tax	10.8% – 12% on estates over $7.1 million
D.C.	Estate tax	11.2% – 16% on estates over $4 million
Hawaii	Estate tax	10% – 12% on estates over $5.5 million
Illinois	Estate tax	0.8% – 16% on estates over $4 million
Iowa	Inheritance tax	Up to 15%
Kentucky	Inheritance tax	Up to 16%
Maine	Estate tax	8% – 12% on estates over $5.8 million
Maryland	Estate tax and inheritance tax	0.8% – 16% over $5 million and inheritance tax of up to 10%
Massachusetts	Estate tax	0.8% – 16% on estates over $1 million
Minnesota	Estate tax	13% – 16% on estates over $3 million
Nebraska	Inheritance tax	Up to 18%
New Jersey	Inheritance tax	Up to 16%
New York	Estate tax	3.06% – 16% on estates over $5.9 million
Oregon	Estate tax	10% – 16% on estates over $1 million
Pennsylvania	Inheritance tax	Up to 15%
Rhode Island	Estate tax	0.8% – 16% on estates over $1.6 million
Vermont	Estate tax	16% on estates over $5 million
Washington	Estate tax	10% – 20% on estates over $2.2 million

If you live in a state not listed above, you won’t have to pay an estate or inheritance tax, but if you do reside in one of them, then purchasing the home before your parents pass is one way to avoid it. If you wait to inherit the property, you may have to pay a capital gains tax if and when you sell it.

A capital gains tax is only levied when you sell the house for a profit, and not at the time of inheritance.

Personal Considerations

If finances are not an issue, there are personal considerations to navigate through. Here are three questions to think about.

Do You Currently Live Close To Your Aging Parents’ House or Will You Need a Long-Distance Relocation?

Moving anywhere is no small task. An out-of-state move is logistically more complicated and full of changes a local move would not have.

Besides extra moving expenses, here are some other changes that may occur:

Careers

Children’s schooling
Friends and community
Activities

Culture
Driver’s licenses
Vehicle registrations

Voter registrations
Utility Companies
Work certifications

These are only some of the many things that change when moving to another state. If your elderly parents’ house is not nearby, this short list must be considered before committing to such a major life disruption.

The changes would apply to you, your spouse, and your children. That’s assuming you would reside in the house.

What Will You Do With the Property?

If your parents and other involved family members are not opposed to this option, purchasing the house as an investment property to rent out comes with the following benefits:

It creates a source of monthly income.
It diversifies your portfolio.
It secures a better financial future.

However, it also means you will be a landlord. Here’s a list of some of the responsibilities that come with being a landlord:

Tenant screening
Providing safety equipment

Property maintenance
Responding to repairs
Maintaining locks

Maintaining appliances
Maintaining electrical and plumbing systems
Snow removal

Landscaping
Security deposits and rent collection
Reporting issues

Writing up lease agreements

If you already own the house you currently reside in and are purchasing your elderly parents’ house as an investment property to rent out, these responsibilities need to be heavily considered before doing so.

You may discover you are not up for the task.

Does the House Trigger Any Negative Emotions?

This is one of the more subtle things to consider, as people are not always conscious of the emotional state a particular house puts them in.

However, houses can become triggers for negative emotions. Triggers can be anything that makes you remember a traumatic event. Places, like the house you grew up in, can become triggers if traumatic events took place in them.

Any of the following can become triggers:

Smells
Sounds
Sights

If you can only associate your elderly parents’ house with negative emotions, it might not be a good idea to purchase it.

Health Considerations

The health of your elderly parents becomes more and more relevant as the years advance. For instance, it can get really scary if your aging parent suddenly stops picking up their phones. During times like these, it’s important to consider living with your parents to ensure they get adequate medical attention. 5 Things to Do if Elderly Parents Don’t Answer the Phone

But if you and your parents start living in the same house, you need to make certain considerations to ensure that the quality of life is increasing for both of you.

Here are a few things you need to consider before purchasing your parents’ home and moving in with them.

Is There Enough Room For Everyone To Live Safely?

If you’re moving in with a spouse and children, there should be enough bedrooms, bathrooms, and living space to accommodate everyone. Older adults are more susceptible to falls, and a house free of extra clutter would mitigate the risk.

If you don’t have the skill set or time to medically care for your parents, you may also need to hire a home care aide, which means that another person will be walking around the living space, sometimes residing in the house.

Does Any Safety Equipment Need To Be Installed In the House?

If one or both of your parents use a walker or wheelchair, there are four items you may need to consider installing:

Stairlift
Vertical platform lift

Wheelchair ramp
Grab bars

Stairlift: This is an assisted living device for people who use walkers with a seat for someone to ride up the stairs. Installing a stair lift is costly, ranging anywhere from $3,200 – $7,500. Three of the best brands for stair lifts are: 4 Reasons Why Stairlifts Are So Expensive

Vertical Platform Lift: This works more like an elevator between floors, where someone can roll their wheelchair directly onto it. They can cost anywhere from $10,000 – $25,000 to install. Besides Bruno and AmeriGlide, two other companies that make vertical platform lifts for wheelchairs are:

Wheelchair Ramp: If your parents use a wheelchair, it may also be necessary to build a wheelchair ramp to help them get from the driveway to the front door. That can cost you anywhere from $1,019 – $3,230.

Grab Bars: Another common item to install is a grab bar. These are typically put in bathrooms to prevent slipping. Here are three popular ones from Moen you can buy on Amazon:

Moen R8712D3GBN Home Care 12-Inch Designer Bathroom Grab Bar with Curl Grip, Brushed Nicke l

Lowe’s Home Improvement has a great YouTube video demonstrating how to install grab bars in a bathroom:

Family Considerations

Lastly, you may have siblings or other family members involved in the decision of buying your elderly parents’ house. If so, here are two questions you should answer.

Are There Other Family Members Expecting To Inherit or Buy the House?

If the answer to this question is yes, you have to think about the consequences of causing a rift between you and your family. Buying your elderly parents’ house may not be worth damaging relationships.

What Will Happen to Your Parents’ Belongings?

If your parents have lived in the house for a while, they may have accumulated a lot of possessions. This is a question that affects you, your parents, siblings, and anyone else directly involved in the process. If your parents are downsizing, they may have to give away or eliminate a lot of stuff.

Are you and other family members prepared to put things in storage, sell, give away, or divide amongst each other?

Final Thoughts

There’s no right or wrong answer to whether or not you should buy your elderly parents’ house. Everyone’s situation is different. It just might be the right move for you if the following criteria are met:

You have the purchasing power to acquire the home and fund whatever repairs and remodels it needs.

You want to avoid estate and inheritance tax.
Your life is already established in the area or you can relocate if necessary.
Buying the home won’t cause any rifts between you and other family members.

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