Buying property for disabled daughter

[tilliepoo]

I live in Michigan, on SSDI for health reasons, my dad is going to purchase a condo for me...question is, he is withdrawing his cash to purchase it, but is going to get tax'd on this money he is taking out of his IRA etc.
Thought there might be some kind of tax break for him since im disabled?
Maybe if he gave me the money as a gift etc? Oh, I had filed bankruptcy (completed) and my home gone in foreclosure too. Not sure if this makes
a difference.

Help..

tilliepoo

 

[davew128]

Your being disabled has no bearing on the income on HIS tax return.

 

[ShyCat]

Thought there might be some kind of tax break for him since im disabled?

No. Your disability has zero effect on his taxes.

Maybe if he gave me the money as a gift etc?

Again, no.

Oh, I had filed bankruptcy (completed) and my home gone in foreclosure too. Not sure if this makes a difference.

It doesn't.

 

[xylene]

Your being disabled has no bearing on the income on HIS tax return.

Umm, if she is his dependent, it might.

Clearly the posters father should talk to an accountant before making the withdrawal from his IRA do see if the totality of circumstances would allow him to avoid the 10% penalty.

 

[davew128]

Umm, if she is his dependent, it might.

No it doesn't. The IRA distribution taxability and being subject to penalty has NOTHING to do with OP's disability. Her being disabled has nothing to do with the INCOME reported on her father's return.

Clearly the posters father should talk to an accountant before making the withdrawal from his IRA do see if the totality of circumstances would allow him to avoid the 10% penalty.

There are only certain exceptions available to avoid penalty. While the father might fall into one of them, her being disabled in and of itself or the purpose he is using the money for clearly do NOT fall into them.

It also completely ignores the gift tax consequences of buying a home for a child.....

 

[xylene]

No it doesn't. The IRA distribution taxability and being subject to penalty has NOTHING to do with OP's disability. Her being disabled has nothing to do with the INCOME reported on her father's return.

Be pedantic about your one-dimensional answer (of course he did not earn less or more income ), and ignore the reality accurately pointed out that her being disabled absolutely may impact her father's tax return (and therefore tax liability) if she can be claimed as a dependent.

There are only certain exceptions available to avoid penalty. While the father might fall into one of them, her being disabled in and of itself or the purpose he is using the money for clearly do NOT fall into them.

If her being disabled allows her to be claimed as a dependent, and if a dependent exemption to the 10% early withdrawal is applicable, then yes, her status is relevant. And not in some abstract impossibly remote way.

It also completely ignores the gift tax consequences of buying a home for a child.....

We don't know the totality of the tax situation, but the exemption for gift taxes are quite substantial, unless this is a massively expensive condo, it won't matter as to tax liability so I'll leave it to the poster to raise that concern in conjunction with good estate planning. Which is also impacted by her status as a disabled person.

 

[FlyingRon]

There is no exception to it being taxable INCOME. Ever. Period. Whether you withdraw it now, or after you're 100.

The 10% penalty has eleven exceptions but none of them apply here. The disability exemption only applies to the owner of the plan.

 

[xylene]

There is no exception to it being taxable INCOME. Ever. Period. Whether you withdraw it now, or after you're 100.

The 10% penalty has eleven exceptions but none of them apply here. The disability exemption only applies to the owner of the plan.

The dependent health care exemption might fit the bill.

If she is a dependent. Which she may be because of her disability.

And if you can reasonably articulate the connection of the condo to a medical necessity... like wheelchair access.

 

[davew128]

Be pedantic about your one-dimensional answer (of course he did not earn less or more income ), and ignore the reality accurately pointed out that her being disabled absolutely may impact her father's tax return (and therefore tax liability) if she can be claimed as a dependent.

I didn't write what I did accidentally. It was QUITE deliberate, and BTW being disabled doesn't guarantee someone is a tax dependent as another professional who came to me for help on an audit discovered.

If her being disabled allows her to be claimed as a dependent, and if a dependent exemption to the 10% early withdrawal is applicable, then yes, her status is relevant. And not in some abstract impossibly remote way.

There is no dependent exemption to the early withdrawal.....

We don't know the totality of the tax situation, but the exemption for gift taxes are quite substantial, unless this is a massively expensive condo, it won't matter as to tax liability so I'll leave it to the poster to raise that concern in conjunction with good estate planning. Which is also impacted by her status as a disabled person.

Which has nothing to do with the fact that a gift tax return NEEDS to be filed.

 

[davew128]

The dependent health care exemption might fit the bill.

If she is a dependent. Which she may be because of her disability.

And if you can reasonably articulate the connection of the condo to a medical necessity... like wheelchair access.

I could also throw something against the wall hoping it sticks.

The counter to your argument is a) the medical necessity of purchasing a specific home to fit the medical needs of this individual that the existing residence did not have and b) cost of capital expenditures exceeding the increase in FMV......

I can guarantee you buying a home is not and will not be a medical deduction unless you buy a bubble.

 

[LdiJ]

I didn't write what I did accidentally. It was QUITE deliberate, and BTW being disabled doesn't guarantee someone is a tax dependent as another professional who came to me for help on an audit discovered.

There is no dependent exemption to the early withdrawal.....

Which has nothing to do with the fact that a gift tax return NEEDS to be filed.

Unless dad retains ownership of the condo. In that instance a gift tax return would not need to be filed. One could claim that dad was gifting the OP the fair market value of what the condo would rent for each year, but I think its unlikely (in Michigan) that it would exceed the annual gift tax exclusion.

 

[xylene]

I didn't write what I did accidentally. It was QUITE deliberate, and BTW being disabled doesn't guarantee someone is a tax dependent as another professional who came to me for help on an audit discovered.

Nothing in the world is guaranteed.

The poster asked for ideas to lower her fathers taxes

Of course that does not mean it automatically and universally applies to her situation.

But - you were the one dealing in absolutes. The posters disability status absolutely could impact the tax liability

There is no dependent exemption to the early withdrawal.....

Oh really. Publication 590 outlines several, and at least 2 that may apply to the poster.

Which has nothing to do with the fact that a gift tax return NEEDS to be filed.

The father is giving more in one year than the gifting exemption? You don't know that.

Besides, the poster was not asking what forms to file.

As to your last point - case studies of disabled homeowners point to those who have successfully made such arguments. It's not impossible.

 

[LdiJ]

The dependent health care exemption might fit the bill.

If she is a dependent. Which she may be because of her disability.

And if you can reasonably articulate the connection of the condo to a medical necessity... like wheelchair access.

I am sorry, but that answer is really out in left field.

As one more tax professional responding....No, there is no applicable exclusion available here.

 

[xylene]

I am sorry, but that answer is really out in left field.

As one more tax professional responding....No, there is no applicable exclusion available here.

I concede that, because you are credible

 

[davew128]

I concede that, because you are credible

And you are not.