I would like to buy my parents their offering to sell it to me at below market value for $250,000 (the house is valued around $350,000).

Asked by Vik, Stony Brook, NY Sat Apr 9, 2011

What types of problems will I face in terms of taxes & what about my parents? My parents want to downsize & I'm already living in house.

Help the community by answering this question:

+ web reference
Web reference:


Vincent Carr…, , New York
Mon Apr 11, 2011
Vikki, any clients that i have had in the past in your situation did not have any tax consequences that I know of. you and your parents should be in touch with your prospective accountants for any tax information/questions. It is far to complicated a question to answer in a blog post. The 100k your parents are giving you is called a gift of equity. this will satisfy your down payment requirement to get a loan and as a result you will not have to come out of pocket much at all to obtain financing for the remaining 250k. If you have any further questions regarding financing please do not hesitate to email me your contact information. I will promptly be in touch and answer any questions that you have withe regards to my professional expertise as a mortgage banker for the past 10 years. Vincent@RHFunding.com.
0 votes
Angela Nagli…, Agent, New York, NY
Sun Apr 10, 2011
It's an advantage to you for sure :
-The loan to value of your mortgage(if you go for a loan to purchase) will be low helping to possibly get a better mortgage deal and faster loan approval.
- You are starting with equity already built in and equity will be higher as the market inproves.
-I dont believe you will have a tax issue (but check with your accodunt)
For your parents:
If they have owned the house for many years they will have lower capital gain tax. (check with accountant)
Resale (City and State tax) lower that if selling at full value.
Sitting down with a professional tax accountant is best for your parents, if you need a mortage you should also consult with your bank or mortage broker.
Angela Naglieri
Licensed Real Estate Broker
Urgo Realty, Inc.
36-51 Bell Boulevard Suite 202
Bayside, NY 11361
0 votes
Anna M Brocco, Agent, Williston Park, NY
Sun Apr 10, 2011
When it comes to any tax issues, it's best to consult with your tax professional and or an attorney, he/she can best advise as it relates to your specific situation....
0 votes
Therese L Ko…, Agent, Bayside NY 11361, NY
Sun Apr 10, 2011
Hi Vikki, count your blessings that your parents can do that for you. Make sure you speak to your accountant- your parents may/may not need to give you a gift letter (for the difference in the market value for tax purposes) and whatever they are selling it to you for. When you go to sell, it will also affect the market and cost value and capital gains taxes....your accountant knows best. Terry K 718-614-3167 cell or email me therese.korahais@elliman.com
0 votes
John Pinard, Agent, Rosedale, NY
Sun Apr 10, 2011

Get a lawyer to draw up a contract and apply for a mortgage if you don't have all cash. When you close on the house your parents will pay a small transfer tax.

0 votes
Derek W, Agent, Mount Vernon, NY
Sun Apr 10, 2011
You shouldnt have any issues in terms of taxes but the bank may have additional questions because this is not an "arms length transaction". If the deal is structured properly it will close easily and if not you will have some difficulty. If you are working with a mortgage broker now he/she should be able to provide you with solid answers.
0 votes
Dallas Texas, Agent, Dallas, TN
Sun Apr 10, 2011
Do your parents still have a mortgage on the property ? Or paid off the home?

If a mortgage will require lender approval for a short sale MOST lenders will not allow a family member to purchase.

Taxes speak with county office who are the experts

What about your parents? Guess they would move or reside there with you
0 votes
allan erps,A…, Agent, Pearl River, NY
Sun Apr 10, 2011
James & Ralph are correct regarding the consulting of an accountant. There will be questions asked and it is best to be prepared in advance(DMV on a lower level does the same thing when getting a car below market value).
0 votes
James Gordon…, Agent, Hamilton, OH
Sun Apr 10, 2011
Vikki check with an accountant. If the market value is 350k and your purchase is 250k there may be gift tax involved. A good CPA can structure the purchase in such a way as to avoid IRS penalties.
0 votes
Ralph Windsc…, Agent, Hauppauge, NY
Sun Apr 10, 2011
My first advice is to speak with your accountant but I doubt you or your parents have to worry. They're not giving you the house, they're receiving a substantial sum even though it may be below market. It's not like they're selling it to you for $1 or something ridiculous like that. But, again, check with your or their accountant. If they need assistance in finding a condo or coop, I'd be happy to assist. Good luck to you and your folks.

Ralph Windschuh
Associate Broker
Senior Real Estate Specialist
Certified Buyer Representative
Century 21 Princeton Properties
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more