I would be very careful to ask an attorney and tax professional for advice, since it appears you have refinanced your home to pull out equity. Purchase money is non-recourse in California. You will receive a 1099-C (Cancellation of Debt) from your 1st and other lien holders. The IRS will require you to pay taxes on that :income" -- unless you can offset it with an insolvency declaration. I have someone I work with that can advise you along those lines. There is no real "advantage" to your daughter and her finace to buyng your specific home -- they can buy whatever they qualify for. It would be lender fraud if you mis-represented the sale and did not disclose the relationship to the lenders. Please do the research and look into a loan modification as well. Good luck in your decision.