PolishPete

Kind of a weird question, not sure it's even a valid question, or just a silly question, but hopefully somebody knows the answer.

Lets say my parents home is worth $800K, but they sell it to me for $300K. Anything wrong with that? Bank, govt, etc. will be ok with it?

I bought a Jeep for $16K, knowing it was going to my g/f when she finished school, then sold it to her for the payoff amount 6 months later $12K. She just got a letter fromt the IRS stating they thought she lied on the tax form, and that $12K was too low for the vehicle, and that she owed another $500 in taxes. She'll just send in the bill of sale, and everything will be ok, but...if they're asking questions over $4K...will they ask about $500K??? Or is it ok?

Background: Girl and I can afford like $300K. Mom has huge house that just me and her live in. If I move out, there's no reason for her to keep the house. She'd sell it. But I'd like to buy it from her (dream home type deal, childhood, etc. It's a great house). But...can't afford it now. She'd sell it for $300K and work things out later. Is that ok?

phil2

you would do a family deed transfer and I believe that there is no tax implication....ask an accountant.

svtmike

Shouldn't be anything wrong with the purchase below market value. What I'd be worried about:

1) Getting the terms in writing for what happens with the proceeds when you sell the house, and understanding any tax implications for both parties.
2) Making sure I can pay the insurance/property taxes/upkeep/operating costs in addition to the mortgage.

IlliNorge

+1 for 2)

All of the taxes, appraisals, etc. will be based on a $800k home, not on what you paid for it.

Also the IRS has rules for "gifts" to those in the family. There is a limit and this transaction may exceed the limit.

MR1

She can just add you to the deed first making you a part owner. The type of ownership will have to be determined. As far as the bank, it's a seperate transaction if there is a loan involved. Who ever is on the loan can't just transfer their liability at will. The loan would have to be paid off and a new one obtained if you want complete control with it only in your name. It does depend on your intentions. As stated, contact a CPA and perhaps a lawyer.

Rock2534

I can't speak to the house issue, but as far as the jeep in concerned you should just send their letter back to them with the reply "Prove IT". There could be a lot of reasons to sell a car for less than market value, it could be damaged for all they know.

PolishPete

Haha...I like that idea.


Sucks that we can't even sell stuff (big stuff) for what'd we'd like without the government at least OK'ing the price, it seems like. Too bad.

juniorbean

iTrader: (5)

to both. You will pay taxes based on it being an $800k home and yes, you will likely exceed the "gift" limit. If I were you I'd hire and accountant and get a straight answer instead of 10 answers from 10 different people replying on an internet forum.

The other thing I'd worry about, and this may not matter to you... but I'd worry that your neighbors are going to fucking hate you. You are going to kill the comps in the neighborhood and you will not make many friends that way. Just some food for thought.

As for the Jeep... yes, Bill of Sale should suffice.

doopstr

Wouldn't it be better for your mom if she sold it at $800k and gave you the $300k?

vas25tl

I hate how involved the IRS has to be in everything....

AS3.0CL

if your mom owes nothing on the house or below $300,000, get your name and your wife on the deed of the house. then since your on the deed refi the house in just yours and your wife's name for a loan amount of 300K, this will take your mother off the mortgage and dead. if she had a balance on the house then give her the remaining cash out of the refinance.

you may be able to do a fmily deed transfer like phil2 and then refi the home and take the necessary cash out to give to your mother.

you can have the house, refiing the house at a low LTV granted if you have good credit you can get a very low interest rate and avoid mortgage insurance. purchasing the home with little money down or a gift of equity will result in a higher interest rate and mortgage insurance.

juniorbean

iTrader: (5)

Zippee

I don't understand why the IRS is involved with the Jeep sale. Normally the Fed's don't deal with car sales unless you are trying to write something off.

PolishPete

Thank you. That's kind of what I was looking to see if could be done. I'll research that further.

PolishPete

Yeah, don't know what the neighbors would think. I grew up there, and know them all. Our block, and really whole town has gotten out of control with home prices. There was a town meeting about how the older folks are having their children leave the house (growing up), and they'd like to sell and buy a smaller house, but the land alone costs so much that they can't. The town is all about tear-down-and-rebuild-bigger.

On my block alone, at each corner, the 2 houses were torn town, and 4 houes built in their spot. $950K for 2 of them and $600K for the other 2. The bigger ones sold for $650K (yup, listed for $950K and sold for $650K). The other two for about $550K. All this happened right as the housing market dropped, so the builders kinda got screwed. House across the street and the house next door had mansion built on. Basically, they left the houses and added on a mansion, making really big houses. We have a big house, with an acre lot, which is what I love most. You just can by that kind of land in the suburbs of Chicago anymore. Everyone wants to put 2 house where 1 used to be, so all new construction has tiny lots. Not to mention I love the architecture and the layout of the house (its a one off, not a cookie cutter type design)...so I'd love to live there, but can't afford it now, and my mother who can afford it, doesn't really need it once I move out. Bummer.