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  1. #1

    Default Would Buying a Home with a Parent Affect Social Security Benefits

    I'm currently on SSI and SSDI disability and own my home. My Dad also owns his own home. We have been thinking of selling both of our homes and combining our money from the sales to get a better home together. A house we found seems perfect for us. It has the main house level, and then it has a lower level that accessible by simply walking down a flight of stairs. The lower level has its own kitchen, living room, full bathroom and bedroom. So, we were thinking that my Dad would live upstairs and I would live downstairs, and that way we would sort of still have our independence, although we'd still spend time together.

    Now, I have to consider how this arrangement might affect my benefits. My Dad told me of someone else who is on SSI and lives in a similar situation with her parents, and said she had to do it that way in order to not have her benefits affected. I'm not sure of the particulars of her situation though. The house my Dad and I are considering is a single house, and not a house with a rental unit attached with a separate address. So in the eyes of the government, we'd be living together.

    Also of importance, the house is around $200,000. The sale of my Dad's current house would be able to fund about 2/3 of the new house, and mine would fund 1/3. We were going to put both our names on the title, with mine being for 1/3 of ownership, so I'd be paying 1/3 of the property taxes, insurance, and utilities.

    Here's what I found so far by doing my own research: https://www.ssa.gov/ssi/spotlights/s...rangements.htm

    The third item down addresses what happens if someone is "helping me pay my shelter costs". But does this apply to our situation?

  2. #2
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    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    The SSA's policy provides that, with the exception of funds in financial accounts, "absent evidence to the contrary, that each owner of shared property owns only his or her fractional interest in the property. We divide the total value of the property among all of the owners in direct proportion to the ownership share held by each."

  3. #3
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    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    If your name is on the title, you are an owner. And you have a roommate who is also an owner.

    Are you really going to be able to sell your houses and buy this new house with no overlap on ownership? In other words, will the purchase of the new house be contingent on the sale of the two other houses OR will you be an owner of two houses for more than a month? How fast can your house and your dad's house sell in the real estate market in your town? You need the advice of a really good realtor and maybe even a real estate attorney who knows you are on SSI. The period you own two houses may affect SSI since only one house can be excluded.

    But assuming you and your dad can both sell your houses quickly and you can close escrow on the new house quickly this may work out fine. Or your dad could sell his and take out a small mortgage (the 1/3) on the new house and then when your house sells, you put that money on his mortgage and get the title changed to both names. Consider the timing on this deal.

    Once you are both on the title and if it is just the two of you living in the house, SSI expects that you are going to pay 1/2 of the gas, electricity, heating fuel, water, sewer, garbage, property taxes and property insurance. And you either buy your own food or you pay for 1/2 of the food you both consume. According to you, there will be no mortgage payment. If you don't pay 1/2 of these shelter expenses, then SSI will consider that your father is providing you with some type of in-kind support and maintenance and it will reduce the SSI. You may not be a 1/2 owner, but if it is just the two of you, you will need to pay 1/2 of the normal living expenses. If you have a third or fourth roommate, you can pay your 1/3 or 1/4 accordingly. Your father can pay the cable bill that the two of you use, he can pay your phone bill, he can pay your car insurance, he can buy the toiletries with no affect on SSI. He cannot give you the money to pay the bills, he has to pay them. But you need to pay 1/2 of the basic shelter expenses I listed above.

  4. #4
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    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    Quote Quoting Janke
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    If your name is on the title, you are an owner. And you have a roommate who is also an owner.

    Are you really going to be able to sell your houses and buy this new house with no overlap on ownership? In other words, will the purchase of the new house be contingent on the sale of the two other houses OR will you be an owner of two houses for more than a month? How fast can your house and your dad's house sell in the real estate market in your town? You need the advice of a really good realtor and maybe even a real estate attorney who knows you are on SSI. The period you own two houses may affect SSI since only one house can be excluded.

    But assuming you and your dad can both sell your houses quickly and you can close escrow on the new house quickly this may work out fine. Or your dad could sell his and take out a small mortgage (the 1/3) on the new house and then when your house sells, you put that money on his mortgage and get the title changed to both names. Consider the timing on this deal.
    The OP was very clear that they would need the funds from the sale of their current houses in order to purchase the new house...so none of that is going to be an issue.

    Once you are both on the title and if it is just the two of you living in the house, SSI expects that you are going to pay 1/2 of the gas, electricity, heating fuel, water, sewer, garbage, property taxes and property insurance. And you either buy your own food or you pay for 1/2 of the food you both consume. According to you, there will be no mortgage payment. If you don't pay 1/2 of these shelter expenses, then SSI will consider that your father is providing you with some type of in-kind support and maintenance and it will reduce the SSI. You may not be a 1/2 owner, but if it is just the two of you, you will need to pay 1/2 of the normal living expenses. If you have a third or fourth roommate, you can pay your 1/3 or 1/4 accordingly. Your father can pay the cable bill that the two of you use, he can pay your phone bill, he can pay your car insurance, he can buy the toiletries with no affect on SSI. He cannot give you the money to pay the bills, he has to pay them. But you need to pay 1/2 of the basic shelter expenses I listed above.
    1/2 of the water bill probably, but for the other utilities its likely 1/3. From another forum the house has basement with a kitchen, bath, living room and bedroom that the OP will occupy. The parent will occupy the upstairs which has three bedrooms, kitchen, bath, living room etc., so its proportional and quite defensible for the OP to pay 1/3 of the other utilities.

  5. #5
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    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    First of all, how the two of them choose to divide up the rooms in the house has nothing to do with the computation of in-kind income. And the OP also said they would spend some time together in the same room, would that be his room or the OP's room or would they switch off? How many hours a day? So it might be logical and defensible to divide the other expenses 1/3 and 2/3, there is NO SSI policy that agrees with that.

    In-kind income computations are complicated enough. Trying to 'defend' this 1/3 2/3 share won't satisfy SSI. Here is the first place to start with policy. And who is to say which part of the house is responsible for the electricity bill. Maybe the OP leaves lights on all the time and the father turns them all off.

    https://secure.ssa.gov/apps10/poms.nsf/lnx/0500835340

    Two people in one household that happens to have two kitchens. The SSI recipient has to pay 1/2 of gas, electricity, heating fuel, water, sewer, garbage, property taxes and property insurance in order to not be receiving in-kind income. Food needs to be purchased separately or the cost also split in half.

  6. #6
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    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    Quote Quoting Janke
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    First of all, how the two of them choose to divide up the rooms in the house has nothing to do with the computation of in-kind income. And the OP also said they would spend some time together in the same room, would that be his room or the OP's room or would they switch off? How many hours a day? So it might be logical and defensible to divide the other expenses 1/3 and 2/3, there is NO SSI policy that agrees with that.

    In-kind income computations are complicated enough. Trying to 'defend' this 1/3 2/3 share won't satisfy SSI. Here is the first place to start with policy. And who is to say which part of the house is responsible for the electricity bill. Maybe the OP leaves lights on all the time and the father turns them all off.

    https://secure.ssa.gov/apps10/poms.nsf/lnx/0500835340

    Two people in one household that happens to have two kitchens. The SSI recipient has to pay 1/2 of gas, electricity, heating fuel, water, sewer, garbage, property taxes and property insurance in order to not be receiving in-kind income. Food needs to be purchased separately or the cost also split in half.
    I am sorry, but the OP is only a 1/3 owner of the property and will only be occupying 1/3 of the property, therefore definitely is not responsible for 1/2 of property taxes, and property insurance. I agree that they need to pay 1/2 of water, sewer and garbage as their uses of those items would definitely be 50/50. I do not agreeing with you about gas, electricity, heating fuel because the square footage of the space occupied, effects those utilities.

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    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    It really doesn't matter what either of us think. I gave you SSI policy. You gave me opinion. Do you have policy? The SSI claims rep is supposed to follow policy and not make it up as they feel like it (although I have known a few who do make it up).

    Have you measured the square footage? Perhaps the equitable distribution is 5/8 to 3/8 or 7/12 to 5/12 or some other fraction. But that doesn't even matter. And again, both of them have equal access to the entire house, but by choice they will mostly live and take care of their agreed upon areas. If the OP pays his 1/3 of the property taxes and father does not, the lien will be placed on the entire house, not just 2/3 of the house. And they both owe it.

    When the house sells some day, then the equity will be divided according to the proportional interest by the title company.

    And speaking of selling, is there a plan for what will happen to the ownership share if one of them dies before the other? They should discuss this in advance, and it should be in writing, a contract they both sign.

  8. #8

    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    Quote Quoting Janke
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    It really doesn't matter what either of us think. I gave you SSI policy. You gave me opinion. Do you have policy? The SSI claims rep is supposed to follow policy and not make it up as they feel like it (although I have known a few who do make it up).

    Have you measured the square footage? Perhaps the equitable distribution is 5/8 to 3/8 or 7/12 to 5/12 or some other fraction. But that doesn't even matter. And again, both of them have equal access to the entire house, but by choice they will mostly live and take care of their agreed upon areas. If the OP pays his 1/3 of the property taxes and father does not, the lien will be placed on the entire house, not just 2/3 of the house. And they both owe it.

    When the house sells some day, then the equity will be divided according to the proportional interest by the title company.

    And speaking of selling, is there a plan for what will happen to the ownership share if one of them dies before the other? They should discuss this in advance, and it should be in writing, a contract they both sign.
    First of all, I want to thank you both for helping me out here. I need all the information I can get.

    As for square footage, the total for the house is 2818 SF total, with 1620 being on the upper level, and 1198 on the lower level which is where I'd reside. The upper level is the main house and is much nicer, which the lower level seems to have been built as an afterthought by the original owners.

    When the property taxes are paid, it would probably be paid by one of us (most likely my Dad), but we would determine between us how much of it I'd pay to him for my share. Same for the electric and other utilities. As for the house insurance, I was thinking of putting that in my name since I'd be using the same insurer I have now and also have car insurance which gives me a discount. We'd buy our own food, gas for our cars, health care items, etc.

    As for equity--from what I've been told, if there are 2 names on a house, regardless of ownership percentage, if one person dies, they're name gets removed from the title and then the other person becomes the sole owner. We found that out when I bought my current house which my dad helped me out with. When I bought that, my dad actually paid for it in full and then I made payments each month to him until I paid it off, which was completed about 10 years ago. We put both names on the title so he'd have some control in case I stopped making payments, and also so he'd get automatic ownership of it if I had died. So anyway, it my dad were to die after we bought this new house, I'd become the sole owner.

    If we decided that we didn't want to continue living together, my dad could give me back what I put into it, or we could sell it and he would give me a third of the proceeds from the sale.

  9. #9
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    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    So the fraction is not 1/3 and 2/3 (33% and 66%), more like 3/7 and 4/7 (42% and 58%). Not that it matters since SSI will expect you to pay 1/2 of the property taxes anyway. As well as 1/2 of the expenses I listed in my first post and gave you a link to policy.

    Different states have different types of ownership (joint tenants, tenants in common, etc.) of real estate. With some types of ownership, the co-owner inherits if the other owner dies. With other types of ownership, when one owner dies, his or her estate and the will determines who inherits. Also, this agreement you have about what happens if one changes their mind about living there should be written down and both of you sign it and both keep a copy. If nothing else, then your and his wishes are known although the law will still prevail.

    Have an attorney review the closing documents on this real estate deal and make sure the house is titled the correct way. Now is the time, not later. Many things can happen including a falling out between family members.

  10. #10

    Default Re: Would Buying Home with a Parent Affect Social Security Benefits

    Quote Quoting Janke
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    So the fraction is not 1/3 and 2/3 (33% and 66%), more like 3/7 and 4/7 (42% and 58%). Not that it matters since SSI will expect you to pay 1/2 of the property taxes anyway. As well as 1/2 of the expenses I listed in my first post and gave you a link to policy.

    Different states have different types of ownership (joint tenants, tenants in common, etc.) of real estate. With some types of ownership, the co-owner inherits if the other owner dies. With other types of ownership, when one owner dies, his or her estate and the will determines who inherits. Also, this agreement you have about what happens if one changes their mind about living there should be written down and both of you sign it and both keep a copy. If nothing else, then your and his wishes are known although the law will still prevail.

    Have an attorney review the closing documents on this real estate deal and make sure the house is titled the correct way. Now is the time, not later. Many things can happen including a falling out between family members.
    As for SSI, wouldn't it be enough to simply tell them that we split the property taxes half and half? Would they demand to see some kind of proof? As far as I know, when 2 people's names are on a title, it's not expected that each of them will show up at the courthouse or city hall separately with separate checks to pay their share. Doesn't just one of the people usually make the payment? How the people divide up who pays what usually happens between the people themselves. For example, on my current house, my name and my Dad's name is still on my title because of the arrangement I described in my previous post. I still pay the whole tax bill though because I live in the house alone. The joint tenancy title was only done in order to simplify my dad being able to claim the house if I were to die before paying him back.

    I'd like to add that I asked on another forum about whether or not 2 people could own a house together and put both their names on the title with unequal ownership and I was told we could. So, if the title officially says that we're 2/3 and 1/3 owners, would SSI still expect me to pay 1/2 of the property taxes?

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