Making New Memories of Home

By Karen Tanner Allen
Special to The Washington Post
Saturday, August 9, 2008

Jim Molloy sometimes has to explain to more transient friends that living as an adult in his childhood home isn't weird at all. It's nice.

"I like the history of living in it. It's on a fantastic street," said Molloy, 41, a senior vice president for a commercial real estate firm. He bought the brick Colonial in the District's Chevy Chase neighborhood from his parents 6 1/2 years ago at market price.

One of seven children, he lives there now with his wife, Meg, 38, and their own four children, ages 3 to 11. Their two sons occupy the bedroom that Molloy and his younger brother once shared. The family has inherited several of his parents' longtime neighbors. The children even go to his former school, Blessed Sacrament, within walking distance.

Americans typically aspire to move out of their parents' house, not back in. For some, a move back might conjure too many unpleasant memories, no matter how grand the pad. Another risk is that "it can feel like a step backward," said Adam Davey, a developmental psychologist and associate professor at Temple University in Philadelphia. "You've worked so hard to launch and achieve the independence, and now you're back there."

But Washington's neighborhoods are sprinkled with others like Molloy. These aren't estates like Franklin D. Roosevelt's Hyde Park in New York, where he grew up and raised his own family. They tend to be simple Colonials, ramblers or townhouses, many of which might need updating. Mostly, they are simply too good an opportunity to pass up: a well-built house, attractive price, in a desirable neighborhood. Sometimes it can be a mutual benefit, a way to help a parent age in place.

When Patrick Thomas's mother was considering selling her Silver Spring house in 1985, he and wife, Tammy, were eager to buy it. They loved the neighborhood, Woodside Park, with its tall trees, eclectic house styles and friendly mix of people. Their 1926 Dutch Colonial sits on a deep wooded lot and "has been a great home," said Patrick, now 54 and a partner in selling real estate with his wife. They raised two daughters there, and, for many years, his mother stayed with them in a basement they converted to a private apartment. Mom has since moved to a smaller house down the street.

Any house transfer from parent to child must comply with Internal Revenue Service rules, so the first step in such a transaction should be to consult an accountant or tax lawyer, according to P. Joy Siegel, a real estate lawyer and founder of Settlement Pros in Bethesda.

Then find a settlement lawyer to set up terms for financing and draft the contract to transfer the title.

Parent-child house transfers are usually win-win, Siegel said. "Generally parents are willing to give the [children] a good deal," while the parents avoid the hassle and expense of readying the property for sale on the open market. Parents also get tax benefits from effective estate planning and don't have to fuss about clearing the furniture out of the garage.

In some cases, parents sell the house outright for fair market value. Others structure the deal as a gift over time to the children, within the rules of how much parents are allowed to give children tax-free each year. Perhaps the parents hold the mortgage, but forgive the annual interest.

In turn, "kids are thrilled because they have the opportunity to own something they otherwise wouldn't," said Siegel, who handles several such transactions a year. They also love the idea of raising their kids in the house where they grew up, not so common these days. "It's really special," she said.

The smoothest way to take over a family home is for one sibling to buy it outright, advised John F. Wolf Jr., a Montgomery County real estate and probate lawyer. A parental house that is owned in common by several brothers and sisters can lead to ill feelings when one person chooses to live there while siblings want to cash out. If a dispute reaches the courts, the property will probably be put into trusteeship and then sold, to no one's satisfaction. The sale price would be lower than expected and no one from the family would be allowed to live there, Wolf said.

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