Lifetime Expense

Housing Ideas

Each family member has standard expenses to address throughout their lifetime. Implementing creative solutions for housing, one of the larger expenses, can effectively increase benefits and wealth for a family over generations. Similar to cultivating assets, reducing and planning for this lifetime liability has the potential to greatly improve lifestyle while further extending resources.

Additional Dwelling Units Within Primary Residence

During the purchase process of a primary residence, planning for additional dwelling units by checking the house square footage, floor plan layout, and zoning bylaws may reveal the possibility of legally adding one or more dwelling units for family members within the structure of the existing house.

https://www.investopedia.com/terms/h/housingunits.asp

Accessory Dwelling Unit (ADU)

When purchasing a single family residence, checking local zoning bylaws may reveal the possibility of adding an ADU in the backyard, garage, or elsewhere, either to be rented to help pay the costs of the primary dwelling or to be used as a secondary dwelling for additional family members.

https://backyardadus.com/cities-regulations

A Duplex or Multi-Family Building as a Primary Residence

With a duplex or multi-family building as a primary residence, other units in the building have the ongoing flexibility to either bring in income or be used as residences for family members.

A Duplex or Multi-Family Building as a Family Member’s Residence

As an investment property with a unit dedicated to being the family member's residence, the other units in the building have the possibility of offsetting the building’s holding costs/mortgage/operating expenses, all while the building itself appreciates over time.

Inheriting a Residence from an Older Generation

An older generation (for example grandparents) could potentially will their primary residence to a younger generation (for example a grandchild), who could in turn use it as a primary residence. This could potentially include using a ‘qualified personal residence trust’, which is an irrevocable trust in which a house is transferred to heirs but the grandparent gets to live in it for a specified period.

Purchasing a Residence at Less than Fair Market Value

A house could be sold to a family member for less than fair market value, with the difference in price between the full market value and the sale price considered a gift.

Purchasing a Residence with a Note and Annual Gift

A house could be sold at full market value, with a note held on the property by the seller (in writing and with interest). The annual gift tax exclusion could then be used by the seller to gift back to the buyer the exclusion amount as help to reduce buyer payments on the note.

Gifting the Value of a Residence to Enable a New Purchase in a New Location

If one family member has a home available but not in the desired location, the house could be sold and then the proceeds gifted under the $12MM+ lifetime tax exemption, allowing the younger generation to use the funds to purchase a primary residence in another location.

Implementing a ‘Family Bank’

If funds allow, there may be the opportunity to create a general inheritance pool to loan capital for buying a first home or setting up a first business. Family members can apply to a professional trustee to acquire funding within predetermined limits.

Purchasing a Primary Residence with Subdividable Land

When purchasing a residence, checking zoning bylaws may uncover the possibility of subdividing a lot from the property, either for sale to help pay the costs of another residence or as a site to build a new home for a family member.

Owning a Shared Family Vacation Home

Purchasing new or maintaining an existing vacation home can be done with the express purpose of family communal use, protecting it in a trust or otherwise as a shared family asset, potentially for generations. When structuring the ownership/decision structure, considering the holding costs, and the scale of the family vs the scale of the home can better match the property to the family.

https://store.nolo.com/products/saving-the-family-cottage-cott.html

Renting a Shared Vacation Home

Considering renting vacation homes with the express purpose of collective family use can potentially share the cost or purposefully shelter other family members from vacation rental costs.

Buying a House With the Intent to Rent and Later Sell

Purchasing a single family house can intentionally be for the future financial support of a young family member. A large portion of the purchase price could be financed with the intent of renting the house for years, until the family member is ready to receive the funds. Until that time, a tenant typically pays for the related ownership expenses and decreases any loan balance, all while the building appreciates. The equity created over time in the rental property can then be used by the young family member, whether as collateral or by liquidating (selling) the property.