Posted on: 31st Jan, 2008 07:49 am
My grandparents have both passed away and my mother inherited their house. The house has been paid off for many years and is in my mother's name only. She has been renting it out, but now my brother has decided to purchase it from her. What is the best way for them to go about this?
She is willing to accept monthly payments from him with no interest, but I'm not sure what tax consequences that would present. I have advised her to talk to a tax accountant, but I am trying to also do a little bit of research on my own to make sure that they make a decision that is in the best interest of them both.
She is willing to accept monthly payments from him with no interest, but I'm not sure what tax consequences that would present. I have advised her to talk to a tax accountant, but I am trying to also do a little bit of research on my own to make sure that they make a decision that is in the best interest of them both.
Hi sabra,
Welcome to the forum.
This is good to see you are researching of your own to help your mother and brother.
It will be better if you use a Warranty deed as the title is free from liens. If your mother takes less than the appraised value of the property, she will have to pay gift tax. Annual tax exemption per year is $12000.
Best of luck.
Larry
Welcome to the forum.
This is good to see you are researching of your own to help your mother and brother.
It will be better if you use a Warranty deed as the title is free from liens. If your mother takes less than the appraised value of the property, she will have to pay gift tax. Annual tax exemption per year is $12000.
Best of luck.
Larry
Hi Sabra,
What I understand from the post is, your brother will be purchasing property from your mother and he'll pay the sale price in monthly payments with no interest. So, what your brother needs to do is, consult a real estate attorney who can help him draft the deed and the purchase contract etc depending on the way the transaction occurs.
I don't see any tax consequences as such. There may have been gift tax issues had your mother simply quitclaimed property to the brother at a value lower than the value of the home. But there's no such thing happening here. So, the question of tax doesn't arise.
good luck
What I understand from the post is, your brother will be purchasing property from your mother and he'll pay the sale price in monthly payments with no interest. So, what your brother needs to do is, consult a real estate attorney who can help him draft the deed and the purchase contract etc depending on the way the transaction occurs.
I don't see any tax consequences as such. There may have been gift tax issues had your mother simply quitclaimed property to the brother at a value lower than the value of the home. But there's no such thing happening here. So, the question of tax doesn't arise.
good luck
i would suggest that the mother add the son to title and then he can refinance the property to give his mother the amount she wants from him to purchase the home. this is a common and easy way to accomplish this type of transaction.
I am in a similar situation, but aren't their consequences to simply adding someone to a title, lisa? I am assuming that would trigger a gift tax.
I'm not sure about the tax liabilities, but they can always do a quick claim to add your brother to the title. That way if he doesn't pay, she still has control over the property.
Good Luck!!
Good Luck!!