Home Selling in 73162>Question Details

Vlh62, Home Seller in 73162

What happens if you sell your house for less than it's worth to a family member?

Asked by Vlh62, 73162 Wed Jun 13, 2012

I would like to sell my home to my daughter and her husband. We have been carrying the mortgage on the home for over a year and just want to get rid of the payment.

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Vlh62’s answer
We are selling her the house for more than we owe on the mortgage so I don't need to do any type of a short sale. My main concern was the tax implications. We purchased a new home last year and have never put this home on the market. We put a considerable amount of money into the property prior to buying our new home.($40,000 on the kitchen and another 30,000 for just general repair and granite throughout the home) We had no plans to move but happened to find our dream home on a lake and couldn't resist. The reason I'm selling it so cheaply to her is I don't feel that a lot of this money we invested would be returned in the sell price of the home. It would be my preference if I'm going to give away $70,000 in home improvements alone that it go to one of my children. At this time my daughter and her husband are the only ones that can quality for a loan in the 150,000 range. According to the property tax website our home is worth about $200,000. I plan on selling it to my daughter in the $150,000 range. I have never listed this home on the mls and am hoping that by doing this it won't destroy the home values in the neighborhood. There are so many variables in doing this I just wanted to make sure that I have thought of everything. We have this home on a ten year mortgage and are making payments of $2500.00 a month which is a complete and total waste of money.
0 votes Thank Flag Link Wed Jun 20, 2012
You might consider refinancing the property to extract your equity and then selling it to your daughter. Borrowed money isn't taxed. When you refinance, I think you are exempt for up to $500,000 of capital gains taxes. I partner with sellers all of the time using this strategy. This may be your best bet. If your buyer can't qualify, consider cosigning the mortgage for them.
Flag Wed Oct 30, 2013
It all depends on your mortgage. How have you determined what your home is worth? If you are looking at tax records or one of the sites, like zillow, you probably do not know what true market value is. I would be happy to visit with you and do a market analysis for you. Of course, real market value is what someone is willing to pay.

Can your daughter and her husband pay enough to pay off your mortgage? If so, you should not have a problem selling the house to them.

If you are wanting to negotiate a short sale with the bank, your family member may not be able to purchase the property. I am knowledgeable about short sales and would be happy to discuss that possibility with you if that is what you are considering.

If I can help you, please give me a call at 405-808-7922.

Carolyn Sims
Keller Williams Northwest
0 votes Thank Flag Link Wed Jun 13, 2012
If you are selling the home, the mortgage becomes due and payable upon transfer. If you sell it for less than you owe, you would have to pay the difference or seek a short sale. If you want your daughter to take over your mortgage, you will have to either keep it in your name and have her pay or check to see if it is assumable.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Wed Jun 13, 2012
To answer your question:

Nothing will happen if you sell your home for less than it is worth to a family member.

Are you selling the home to a family member for less than your current mortgage on the property? If you are selling the home for less than you owe on the home than you will have to receive written agreement from the lender to sale the home short.

Hope this helps,

Josh Barnett, Realtor
Metro First Realty
Web Reference: http://www.1ListingFee.com
0 votes Thank Flag Link Wed Jun 13, 2012
I understand your desire to get rid of the monthly payment and selling it to your daughter would definitely accomplish that for you. However, your lender expects to paid in full. So, if you sell it for less than you owe on your note then the lender will still hold you to what you agreed to at the closing table. You might read over your note and mortgage & see if you loan is assumable. If it is an assumable loan and if your daughter qualifies she can take over your payments.
0 votes Thank Flag Link Wed Jun 13, 2012
You, and your daughter, should probably consult with a tax specialist. It's possible that the "difference" between true market value, and what you agree upon, may be considered "income" for your daughter.
0 votes Thank Flag Link Wed Jun 13, 2012
Alan May, Real Estate Pro in Evanston, IL
Absolutely nothing. You can do what you want with your property so the fact you're deciding to offer your daughter and son in law a really good deal on a home is a wonderful thing on your part. Just have them go to a local bank to get a mortgage and find a title company near you to handle the closing.

If you would like a referral on these, please do not hesitate to contact me anytime.

Russell Benson, REALTOR®
Prudential Alliance Realty
0 votes Thank Flag Link Wed Jun 13, 2012
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