Legal Question in Wills and Trusts in Texas

Building a house for my parents

Scenario:

I live in Houston TX 77074

My poor parents own 2 lots outside of McAllen TX. 78539, but didn't pay the taxes for several years. In order to not lose the property, I paid the back taxes for both lots last year. In return my parents promised me one lot...the lot with my parents old house...nothing in writing yet.

Well, now they need a new house...the old one is falling apart. My 4 siblings don't have the means so I promised my parents that I will take care of it and build a house on the second lot for them ...at first I thought it might be best to change the deed to my name...but then we would lose the homestead exemption...higher taxes would be the result.

How should I proceed, I do like to build a house for my parents...but my means are also somewhat limited, therefore, I like to use the homestead exemption, on the other hand I like to make sure...once my parents are passed on that the house will be mine...free and clear without fighting my siblings.

Also, are there any tax deductions for helping my parents?

Thank you very much

P.S. It might be a Real Estate question as well....


Asked on 9/12/07, 9:41 am

3 Answers from Attorneys
Cheryl Rivera Smith The Smith Law Firm

Re: Building a house for my parents

When the taxing authorities find out that the house is no longer the homestead of your parents, you would be assessed back taxes and penalties and interest (which could be substantial) during the time you received the benefit and didn't pay appropriate taxes. You might as well change the deed, for your protection, and move the homestead exemption to the other lot.

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Answered on 9/12/07, 9:55 am
Kathryn Perales PMI Oil Tools

Re: Building a house for my parents

It may be a good idea to have your parents deed you the remainder interest in the property, while they retain a life estate. That way the land will automatically pass to you upon their death. They will be able to keep their homestead and over 65 exemptions, if applicable. They should be able to designate both lots as their homestead, so long as they are living on one of them.

I do not know of any tax deductions for helping your parents, however the money you spend on building the new house will increase the basis of the property. This will help you avoid income tax or capital gains tax when and if you sell the property.

You will need to consult with an attorney to prepare the document, make sure this strategy is the right one for you, and advise you about tax consequences and procedures.

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Answered on 9/12/07, 10:43 am
James Grissom Law Office of James P. Grissom

Re: Building a house for my parents

This matter can be taken care of by contractual language in a will. Your parents can retain the homestead exemption and you can acquire the property when they are gone. If you want my help with this, I'm in Edinburg, TX. contact me by email

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Answered on 9/12/07, 11:22 am


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