Home Selling in Glendale>Question Details

Helpmeglenda…, Home Seller in Glendale, CA

I would like to sell a house below its market value to a brother in law.

Asked by Helpmeglendale, Glendale, CA Thu Nov 5, 2009

Say i own a house outright appraised at $400k, and would like to sell it at $300k. What are the tax implications? Is there gift tax when its in-laws?

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9
Something you should be aware ofif your brother in law is getting a loan to buy your house:

Bank is not going to allow the sales price to be different from the appraised price.
1 vote Thank Flag Link Thu Nov 5, 2009
Helpme
You would be best advised to talk with a real estate attorney and a CPA. There is a type of transfer called intrafamily, which is a non-arm's length transfer within family members so the transfer does not trigger a re-valuation by the county assessor's office.

If you need a referral to a local real estate attorney or CPA I'd be happy provide you with one.
1 vote Thank Flag Link Thu Nov 5, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Best advice would be to consult a local CPA to find out the actual Tax factors and what you can do.

But from what I can see it looks like your brother and law should be worried about the taxes... if he ends up selling the house with all the equity you are giving him.
0 votes Thank Flag Link Wed Aug 3, 2011
Mario Villagran,

You cracked me up. That was a good one. ("You sound like a nice person so if you have anymore money you'd like to give away please call me").
Not that many agents have a sense of humor.


jes
0 votes Thank Flag Link Thu Nov 5, 2009
The following should be changed. "Bank is not going to allow the sales price to be different from the appraised price."

The bank will not lend for MORE than the appraised price. As long as the real estate is worth what is wanted to borrow the bank will not insist you spend more money to buy a place. If they did ALL foreclosures would be selling for more money.
0 votes Thank Flag Link Thu Nov 5, 2009
Your house and as long as you don't have to get the approval of the bank, you can sell it for peanuts if you like. You have to think of any tax implications to you. If you are single and have lived in the home for 2 of the last 5 years than you are exempt from taxes on up to $250k in capital gains and $500k for married couples. You're brother in-law will pay taxes if he turns around and flips it right away. As a matter of fact he can talk to the lender to see if he can use this gift of equity as part of the down payment. You sound like a nice person so if you have anymore money you'd like to give away please call me :).
0 votes Thank Flag Link Thu Nov 5, 2009
That's a good question for your CPA or a tax accountant. Each situation is different, and if you don't get correct information, it can come back to hurt you, your in-law, or both of you. Good luck!
0 votes Thank Flag Link Thu Nov 5, 2009
The best person to discuss the tax ramifications is you CPA. Only he/she knows your tax status and how this would effect yours or your familys tax consequences. If you need to value the property lower for transfer purposes, call an agent and get comps to support the lower price. This should not be a problem as the tax assessor and the banks have been lowering values for months. If you sell the property and carry the mortgage, you will make a lot more in the long run and check with your CPA on this also. Patricia
0 votes Thank Flag Link Thu Nov 5, 2009
Hi,

I don't believe there will be any tax issues for selling a property less than market value. Your best source will be to consult with an accountant.

Sincerely,

Gary Gukassian
Beverly Realty
0 votes Thank Flag Link Thu Nov 5, 2009
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