Buying or Selling a Home/Just quick question

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Expert: - 8/14/2009


Question
hello,

 I live in a small desert town in California. A member of my family wants to sell her property to me for 1200.00. Also I'm in her will for the same property. What way is less on taxes Inherit or purchase? Thank you for your time..

Answer
Hey, Shawn.

There are too many variables for me to answer such a broad question. It will be dependent on many factors, such as your tax status, the property owner's tax status, and the tax basis of the property, just to name three. Additionally, since you are here in California, be wary of intra-family transactions where the price is extraordinary low, as it probably would be in this case. The State, County, and City needs that property tax income, so they would probably investigate such a low selling price.

My question would be, Why $1,200? I suspect the tax basis, which is the value of the home for tax purposes, is much higher than that, so it's going to be a huge red flag for the tax assessor. If the owner simply wants some money and owns the property free and clear, a possibility would be that s/he simply "quit claim" the property to you, which is a way of the property owner signing over all the rights to the property. Since tax laws also allow you to give up to $10,000 a year (might be higher for this tax year) to any person of your choosing without that person having to pay taxes on the gift, give the property owner $1,200.

Again, though, be wary of this transaction regardless of how you choose to do it. My suggestion would be to consult with your CPA or tax attorney for your specific financial situation.

Hope that helps.

Russel

Buying or Selling a Home

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Russel Ray

Expertise

Through home inspections, I provide an education about real estate. I'm one of those rare home inspectors who has been involved in real estate in many different capacities: as a Realtor (in Texas), as a property investor/flipper, as a teacher, and as a marketing expert (for Realtors and home inspectors). I believe that my experience as a Realtor and property investor provides me with a different viewpoint about home inspections in that I work for my Clients, but when there are other people involved in helping my Clients, then I firmly believe in helping them, too. That includes Realtors (both the seller's and the buyer's), repair professionals (e.g., plumbers, electricians, etc.). If I can get all the players (seller, seller's Realtor, buyer, buyer's Realtor, and repair professionals) playing in the same sandbox together to accomplish goals as a TEAM (Together Everyone Accomplishes More), then I believe I have succeeded in my job as a home inspector. My profession is, in my opinion, much more than simply documenting the condition of a property and then take the money and run. I am also a rare breed in that I don't believe that one inspection fits the needs of all Clients, and I have led the industry in understanding that fact. For example, the goals of a property investor are far different than the goals of someone buying a property to live in. The goals of a seller (a pre-listing inspection) are far different than the goals of a buyer (a pre-purchase inspection). To that end, I offer 14 different types of inspections, e.g., STANDARD, LIST, RENTER, BASIC, MAINTENANCE, SPOT, and more. I believe in giving the benefit of the doubt to all professionals in whatever industry they represent until they prove me wrong.

Experience

Over 42 years in all aspects of real estate--building homes, renovating homes, inspecting homes, Realtor.

Organizations
National Association of Certified Home Inspector, Better Business Bureau of San Diego

Education/Credentials
Graduate of Texas A&M University; College Station, Texas

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