buying cheap from the family

[jec411]

What is the name of your state?Louisiana.

My grandmother owns 2 homes. I rent one of them and the other is unoccupied. I wish to purchase both from her. She has offered to sell them both to me at well below market value.

Unoccupied home is worth 90k. The home that I'm renting from her is worth 90k.

Short of taking advantage of her kindness and after speaking with a few mortgage pro's, I've determined this:

I'd buy the home I'm currently living in from her at 75k. Proceeds from that sale would satisfy both outstanding mortgages on the homes for her. She then signs the deed to the unoccupied home over to me.

I have no plans to sell either of these homes for many many years.

Questions:
How would a gift tax apply to either her or I given the relationship, the below market value selling price, and her giving the second home to me without sale?
Any other tax implications for either of us for this transaction?
Any tax bennies for her like a capital loss claim somewhere perhaps?

Thanks for your time.

 

[I AM ALWAYS LIABLE]

What is the name of your state?Louisiana.

My grandmother owns 2 homes. I rent one of them and the other is unoccupied. I wish to purchase both from her. She has offered to sell them both to me at well below market value.

Unoccupied home is worth 90k. The home that I'm renting from her is worth 90k.

Short of taking advantage of her kindness and after speaking with a few mortgage pro's, I've determined this:

I'd buy the home I'm currently living in from her at 75k. Proceeds from that sale would satisfy both outstanding mortgages on the homes for her. She then signs the deed to the unoccupied home over to me.

I have no plans to sell either of these homes for many many years.

Questions:
How would a gift tax apply to either her or I given the relationship, the below market value selling price, and her giving the second home to me without sale?
Any other tax implications for either of us for this transaction?
Any tax bennies for her like a capital loss claim somewhere perhaps?

Thanks for your time.

My response:

Based upon the prices given in your post, I must presume that your definition of "home" is different from mine. Based upon the figures you state, a "home" is not a "home" IF, at any time, the "dwellings" had wheels; e.g., trailers - - either single wide or double wide. If that's the case, I'd "take a pass" on buying something, and living in something, that would need to be registered with the Department of Motor Vehicles. Trailer living just isn't my style.

IAAL

 

[jec411]

unwarranted

My response:

Based upon the prices given in your post, I must presume that your definition of "home" is different from mine. Based upon the figures you state, a "home" is not a "home" IF, at any time, the "dwellings" had wheels; e.g., trailers - - either single wide or double wide. If that's the case, I'd "take a pass" on buying something, and living in something, that would need to be registered with the Department of Motor Vehicles. Trailer living just isn't my style.

IAAL

Um ok. For your info, these are not mobile homes, they're not on wheels, or anything of the sort. Perhaps in your area real estate prices are a bit different.

The HOUSE that I live in is 2 bed, 1 bath, about 1000 sq ft. The HOUSE that is unoccupied is about 2000 sq ft. They're not prefab or manufactured either. Both were built in the mid to late 1940's, and are in fair and great shape.

I posted this thread in the hopes of getting some advice, not to be belittled by someone. Listen, every state has it's impoverished, economic and socially handicaped. I don't fit any of those descriptions. However you probably do. If you assume that I do based on my geographical location, then that just goes to show how ignorant you really are.

So is there someone here who can give me some advice and not a personal attack?

Thx.

 

[Snipes5]

The difference between the fair market value and the price you pay will be considered a gift from Grandma. She will have to file a gift return, although no tax will be due, it will reduce the amount of tax-free estate she will have upon her death.

If the total FMV is $180,000, and you pay $75,000, the gift amount is $105,000. Further, your "basis" in the one house will be $75,000, and in the other will be whatever her basis was, since the second house is an outright gift. This could have pretty serious tax consequences for you if and when you sell the houses, so proceed carefully.

At a minimum, I would see that you pay $75,000 for the one you intend to use as a rental, and take the freebie on your personal residence. That will give you more depreciable basis in the rental property.

Snipes