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dasmith2727 · Joined: 03 Aug 2007 Posts: 1 1.75 Dollars($)

My mother-in-law plans to sell the family home to her son and I for 1/2 of its appraised value. The money that we pay her (1/2) will go to my husband's sister. So we get the house and she gets half the appraised value. We need to make improvements so need to get a loan. We were told that my mother-in-law can quit claim the house to my husband and I and then do a refinance to get the money to pay her (that will go to his sister) and have extra money for improvements. Is this a good thing to do? What are the tax implications down the road for us if we eventually sell the house for obviously much more than we paid my mother-in-law (1/2 the current value)?

blue · Posted: Fri Aug 03, 2007 2:23 pm Post subject:

Hi Dasmith,

Welcome to Mortgagefit discussion board.

carnahandavid · Joined: 21 Dec 2006 Posts: 238 58.41 Dollars($)

Your mother in law is quit claiming the house for value less than its present market value so she may have to pay gift taxes if the value of gift exceeds allowed gift tax exemption limits. But no taxes for you to pay at the time you receive ownership.

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larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Dasmith,

If your mother-in-law wants to transfer the family home to you and your husband, then a quitclaim deed will serve the purpose. And you can refinance with a new loan and pay your sister-in-law. To know more on how to transfer property through quitclaim deed, you can refer to: http://www.mortgagefit.com/quitclaim-deed.html

But on selling the home, you may have to pay the required capital gains tax on the profit earned through sale, provided if you do not qualify for the exemption limit of 500,000$ (as joint filer).

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What is our tax impact if we sell the home?