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Tax Law (Questions About Taxes)/Can I buy house under market value??
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Question
My parents are moving out of the state and they want me to buy their house. So, l'm trying to find out what will the best and cheapest way to do this.
I want to save money on tax and also keep the morgage as low as possible.
At the current house value... I'll have very tough time paying the morgage.
Is it possible to buy a house under current market value?
I want to keep the value where I can do the payment.
Thanks in advance...
Danny,
Thanks for your question.
There is certainly no law prohibiting you from buying a house under market value.
However, since you are buying it from your parents, it becomes a related party transaction. If you buy it for significantly below market value (less than it would sell to an outsider) your parents are considered to have made a gift to you of the difference between the FMV and what you paid. If this is over $12,000 per person (both parents could give $12,000 each) they would have to file a gift tax return. If they have not given any prior taxable gifts, they would need to file a return, but no tax would be due as there is a $1,000,000 lifetime exemption per person.
Hope this helps.
John Stancil,CPA
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John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 35 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com. Prepare and file your own taxes at www.1040stancilcpa.com
Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CGMA, and CFM. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 30 years and have taught accounting and tax at the college level for over 30 years.
Organizations
AICPA, FICPA, IMA, NATP
Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly.
Education/Credentials
DBA University of Memphis
MBA University of Georgia
BS in Accounting Mars Hill College
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