Expert: Sue Bernstein - 4/16/2007

Question
Sorry, i forgot to say that the house is in california:

I got divorced last year and pocketed 90k from a house my husband and i lived
in for 3 years.

my parents have a house that they still owe $75k on. they want to sell it to me
and divide the proceeds amongst their 4 daughthers (includes me).

option 1: parents sell me the house for $80k and i pay off my 3 sisters 32k from
my divorce money. will the banks/loan people allow my parents to sell me their
house for 80K. will they owe taxes since 80k is below market.  it is valued at
around $210k right now.

option 2: sell me their house for $210k and get the $130k equity to divide
amongst us 4.

option 3: sell me their house at $210-32k(my equity portion) = $178k and get the
equity to pay off my 3 sisters.

my plan is to allow them to live there paying $600 a month, which is what they
pay now for their mortgate. I would want to do whichever is less hassle and has
the less tax consequences for them. if we can just transfer their loan and title
to me, i would use my divorce money to give my sisters their share. what do you
think.

Answer
Dear Virginia,

Option 1- the banks have no say what your parents sell their house for.

You really need to talk to an accountant to determine which option is the best for you and your parents.  Any of the options could work but an accountant can tell you which is best for you tax wise.  I would re-direct this question to an accountant on this site.

Good luck.

Sue Bernstein