Can my mom sell her house toher 5 childrenkids at a price that she wants?

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Can my mom sell her house toher 5 childrenkids at a price that she wants?

The balance of my mom’s house is $159,000. Is she able to sell it to us at that price?

Asked on December 29, 2011 under Real Estate Law, Hawaii

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Your mother can sell the home that she has to her children at any price that she desires. However, if she sells it at too low of a price, the Internal Revenue Service and your state's franchise tax board may assert that the difference between the sales price and the fair market value is a gift and could subject your mother to a gift tax.

With that in mind, your mother should consult with a real estate attorney about structuring the transaction based upon fair market value where she takes a promissory note in return and gifts each family member per year a percentage of the home up to $13,000 which would be the amount exempt from federal gift taxation each year until her percentage of ownership in the home is reduced to zero.


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