When you are retired, you need to be extra careful to make smart financial decisions, especially about something as big as buying a home.

What would you do if your sister wanted your parents to buy their new house through her LLC and then rent it back?

That is the situation the family in this story is in, and she is concerned that it will have a negative impact on her parents for taxes and on her for inheritance, so she isn’t sure if she should put a stop to the deal.

WIBTA if I block my sister from buying a house for my parents?

My parents are retired and have been living in the same house for the past 20 years.

It was my grandfather’s house and when he passed away, my parents moved in and finished paying off the mortgage, so they own it outright.

Recently, they decided to sell the house and move closer to their children.

Buying a house with an LLC can have many advantages.

My sister and her husband have an LLC they use for their side businesses, and I found out that my sister is planning to buy the house for my parents under the ownership of her LLC and my parents will pay the mortgage (including taxes and insurance) to the LLC.

My sister asked the siblings if we have an issue with it; my other two siblings said they were fine with it, but I don’t like the idea (I haven’t said anything yet).

Of course, there are some real negatives to consider as well.

Personally, I don’t see any benefit to this arrangement for anyone other than my sister and her husband. The negatives I see are:

1. My parents will make a decent profit off the sale of their house and my understanding of the tax laws are that if the money is reinvested then you don’t pay taxes on the profit, but if you don’t, then you owe income tax on it.
2. The property taxes will continue to increase causing the monthly payment to go up each year. My parents are of the age where they can lock in their property taxes, but they will not be able to freeze the taxes in this arrangement because they won’t be the owners.
3. (I hate even thinking about this one) Someday my parents are going to pass away, and when they do, all of the equity they have paid into the house will be my sister’s. If my parents bought the house themselves, then the equity would be an asset to be divided amongst their beneficiaries, so the rest of us are losing out on this portion of the inheritance. The only advantage to the arrangement is that when they pass, my siblings and I won’t have to figure out what to do with the house.

Maybe these concerns could be dealt with ahead of time.

I know my parents and my sister are on board with this arrangement and my other siblings seem to not have a strong opinion.

If I say something then it’s definitely going to cause tension between us all, but if I don’t, then my parents will be paying more money than they need to, and the other siblings and I will be losing $25-75k each out of the inheritance.

Yeah, I can see how this would cause a lot of conflict.

And since I’m the only one who hasn’t given the okay, I’m either outvoted or I end up changing peoples minds and blowing the whole thing up, either way there will be resentment and drama.

WIBTA?

That is a tough situation, but all of those concerns can be worked out ahead of time with the right contracts.

Read on to see what the people in the comments think about the situation.

As presented, it does sound questionable.

This commenter has a good suggestion.

Here is someone who thinks buying the house with an LLC is suspicious.

This person wonders if the parents fully understand the situation.

Make sure everyone understands the concerns, then let the parents decide.

This family needs a lawyer.

It sounds like a mess.

If you thought that was an interesting story, check this one out about a man who created a points system for his inheritance, and a family friend ends up getting almost all of it.