Expert: Jay Denit - 3/29/2008

Question
My parents own property in Jefferson County, Colorado. My father built the house in 1958 and they own the property outright.  The house is in disrepair, and the parents are in their 80's. I want to move back to assist them because I'm now a widow and free to do so.  I am selling my house and will use the proceeds to make the place livable.  My parents live nearby in another home they have occupied for  20 years...so the place I'm going to live is not their primary residence.  

We were going to remodel the 1958 house so I could live there, but it can't be done. Remodel would require taking it down to the foundation and rebuilding because of codes that didn't exist in 1958 but do now.  

I plan to finance everything we do to make the location livable, from the demolition of the house to getting a sewer tap, putting down a new foundation and purchasing and installing a new modular home on the lot.  I would also put up a new fence.  I am not on the title, but my parents want to assure that I am recognized for what will be about a $150,000 investment in the site.  Current assessed valuation for land and improvements is $139,000, most of which is attributable to the land since the house is falling down. Their 1958 investment is probably around $25,000 with few improvement costs because my father was a builder and did all the work himself.  

I am the sole heir, and this and the house they currently occupy will be my exclusive inheritance one day.   However, I expect to live in the house and help them out until I inherit it.  How can we do this?  I must go forward with the project because they need my help.  I don't want my investment to create a capital gains problem for them, or a gift tax issue for any of us.  I'm putting cash into the demolition, permitting and purchase of the replacement home.

Please give me some idea how we should proceed.  I thought the ideal solution would be a simple sales contract covering the amount of my investment.  Now I'm not so sure.  If you can help, I'll surely appreciate it.

Thanks!

Answer
Hi Ruth,

Sorry - I have been out of town for the last few days.  It's a complicated problem with a simple solution.  Have your parent quit claim you on title to the property.  Ownership can show in all three of your names and then if your parents pass, you are the sole survivor. You don't need a contract or any of that.
A local title company can help you with getting a quit claim deed executed and recorded.

Thanks,