Question: How can I buy real estate with my children using "shared equity?"

Answer: Shared equity is generally seen as a way that families can buy real estate together. The kids live on the property and get the benefits of property usage and ownership tax advantages while Mom and Dad get an investment write off equal to their proportional interest. (Shared equity arrangements, incidentally, can also be among friends, relatives, or business partners.)

Under a shared-equity arrangement, if you own half and the kids own half, you must pay half the mortgage, taxes etc. The kids must pay their half, plus they must pay a market-rate rent for your half of the property in order for you to have a deduction. Of course, once they have paid, you can also give them a gift equal to some portion, or maybe all, their rent.

You will need to work out an equity-sharing arrangement with the help of a local attorney and CPA. A broker can find an appropriate property.

Both you and your children will need wills, living wills, and a proper equity-sharing agreement. You will need to understand what happens if your kids are laid off (you are responsible for the mortgage), or if you and your children become estranged. You will also have to consider the interests of any other children you may have.