Generational Shared Dwelling
My wife and I decided to buy a home. Her parents couldn’t afford their rental without us paying them to help watch our kids while we were at work and I was spending a lot of time there fixing things, mowing the lawn, taking the trash to the street. They were/are physically unable to maintain a house on their own. So we extended the offer to look for something that would suit all of us. They had many demands... the fourth bedroom had to be at least 15x15 to fit their bed set (this was not easy to find, they had to have their own bathroom, RV parking for their boat, a three bay garage, and storage for all the stuff they’ll never use and I’ll have to throw in the trash when they die... 30 years of taxes and paperwork, all of her dead mothers clothing... the usual, right? This ended up being a much bigger house than my wife and I wanted to pay for.
Now comes the tricky stuff:
My wife and I had to qualify for the loan without them because their credit is... somewhere below terrible.
We agreed that we would split the the mortgage and they would pay for part of utilities. I did the math and came to a flat number which we agreed upon.
Do I have to claim their portion of the mortgage and utilities as taxable income? Or do I not have to claim it because the money is going directly to their living expenses. Is this true?
