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PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 4106
Experience:  Tax professional and business consultant for 35 years.
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We are co-owners of our daughter's townhouse in Glen ,

Customer Question

We are co-owners of our daughter's townhouse in Glen Burnie, Maryland. She has had a partner living with her for the last several years, which has enabled her to remain in that home. Her father and I are at retirement age, and as a result of helping with her finances, we do not have the retirement savings we had originally expected. We are both of retirement age, but do not anticipate retiring for a few years. We both enjoy our jobs and are in good health.
However, my daughter is facing living alone, without financial support that her partner had provided. She will be unable, given her salary, to remain in her home - unless she finds roommates. If there were another solution, it would be a relief to all of us.
We have a Cape Cod in Bowie, Maryland that we have owned for 20 years. Its estimated worth is $285,00. We paid $139,000 for it in 1994 and still owe $64,000. We have investments worth $65,000 - and about $10,000 in savings.
I am not sure of the value of our daughter's home. She is currently having a second full bath installed, which we hope will increase her home's value.
My husband and I are willing to downsize, but our house payment is quite low (less than $900 a month). Our daughter does not want to lose her home. If you consider the three of us as a team looking for an answer, what would you suggest?
Submitted: 1 year ago.
Category: Finance
Expert:  PDtax replied 1 year ago.
Welcome to the site. I'mCustomer and will be helping you today.
I can think of a solution. Have your daughter sell her home and pay you what you are due from it. If she takes on a tenant or roomie, she will continue to be house poor, and you don't get anything back.
Your housing is low enough debt service that no change is needed, but that equity could be growing. If you sell, invest the proceeds for ten years at 7%, the value doubles. Replace the home with other housing at the same monthly cost, and you repair your retirement.
It's the best advice, but also the toughest.
Thanks for asking at just answer. Positive feedback is appreciated. I'mCustomer
Customer: replied 1 year ago.
We are not overly concerned with our retirement. Both of us work for the government and can expect decent monthly amounts at retirement. Our daughter's house is probably not worth what she paid. Any other ideas?
Expert:  PDtax replied 1 year ago.
Since you won't sell, roommates and an appraisal are all that's left.
That's not a bad plan either. You committed to this by co- owning, but paying for an adult child's housing is a bad financial place to be in.
You might consider refinancing to reduce the monthly payment to be affordable, even if the term goes out farther.
Thanks again. Positive feedback is appreciated. I'mCustomer

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