Buying or Selling a Home/Sale of home to relative.

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Question
I have a house for sale, it is unoccupied, for 20 months we rented the property out , we lived there for 15 years prior, it is no longer our main home. The IRS says if you lived in the house for at least 2 year and then rent it out, you are subject to a gain IF you do not sell it within a 5 year time frame. It appears we may not be able to sell within the time period and hence be subject to a Capital Gain tax if sold after that period. Would in your opinion sell the house to my daughter for say $10.  and let her put the House up for sale. She would not be living there  and the house would be vacant.

Answer
The IRS would probably call it a sham sale, Jim (most intra-family sales usually are). And the IRS would frown upon that idea. What did you pay for the house way-back-when? Maybe after you sell it now the price you get for it would not be enough to be classified as a capital gain. Talk to a local Realtor and ask that person what legitimate price could you get for it if you do sell it now. If it turns out that the house would not bring as much to be considered a gain, then you have nothing to fear. If you also talk to a local certified public accountant, you may find out another way to get around your problem. But I would not sell the house to ANYONE for just $10 unless it is a rundown shack. The IRS would not believe that is the value of the property. I do wish you well.

Dick Dennis
dixiedee13@aol.com

Buying or Selling a Home

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Dick Dennis

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With more than 41 years as a real estate broker, I can solve most any problem presented. If I can`t, I do my research. Problems with mortgages, trust deeds, foreclosures, odd ways of conveying titles. Most any good Realtor can answer questions satisfactorily, but I answer questions that most cannot. Also, ask about my hard-copy newsletter, The Landed Gentry. It can also be sent to you via PDF.

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Solving real estate problems for 37 years.

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National Association of Realtors

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Publishes The Landed Gentry, guest writer in Who's Who in Creative Real Estate, First Tuesday, Financial Freedom and many newspapers

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e-Pro Realtor, Certified Distressed Property Expert, Who's Who in Creative Real Estate

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