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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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My parents and sister/brother-in-law went in together to buy

Customer Question

My parents and sister/brother-in-law went in together to buy the house my mom is currently living in about 10 years ago. My sister/brother-in-law went bankrupt after that, and my brother-in-law passed away last year. My sister can no longer make the payments on the house. I want to buy the house from her and let my mother continue to live there. If I buy the house for less than market value, will we be stuck with a lot of taxes?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: The house is worth $170000, my sister still owes $137000 on it. My sister will probably have to move it with my mother. My husband is retired, and is willing to use his retirement money to buy the house as an investment. My mother is 90, my sister is 68, and has already had a heart attack a couple of years ago.
Submitted: 11 months ago.
Category: Tax
Expert:  emc011075 replied 11 months ago.

Hi. My name is ***** ***** I will be happy to help you.

If you sell a house for less than fair market value to a relative, the difference between the "sales price" and the fair market value will be treated as a gift. If the sales price is less than original basis (purchase price + improvements), there will be no capital gains to report (or tax for that matter). However if the amount of the gift is more than 14K, the current owner (not you) will have to file a gift tax return. Unless your sister already made gifts of 5.43M, she will be able to use the her life time gift tax exclusion and will not have to pay any gift tax.

Expert:  emc011075 replied 11 months ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?