Selling a house to Daughter
I own a house in Austin Tx worth 600k. want to sell to daughter for 400k, after payoff ill have 200k What is easiest way to do this and cheapest way to transfer ownership after she get mortgage ? Any percussions selling at lower price when it comes to taxes etc…
Terry Says
Whew, you need to ask your tax advisor. If you are trying to completely get rid of the house, you might owe capital gains taxes. Assuming you are single, you can exclude $250,000 of gains (start with the purchase price, and add in any remodeling or improvements you have done over the years).
Do you realize that if you leave the house to your daughter at your death, there will be NO taxes due. She will simply have a new “cost basis” for the house — the value at the date of your death. The easiest way to do that is to put her on the title — making it “joint tenancy with the right of survival.” HOWEVER, that opens your property up to any lawsuits she might incur, or her half could become part of her marital property in a divorce case.
So you might want to create a revocable living trust to own the property– No tax implications, and if something happens to you, she is the successor trustee and the property goes to her — ONLY when you die or are incapacitated.
I realize this is complicated stuff. And I’m not sure of your reasons for making this deal. Do you want to move and get out? If so, where would you go — and would you use all the money to buy into a senior living situation? That might not be a wise idea. If you are just wanting to make sure that your daughter gets the house when you die, then the above advice is a better way to go.
Please write back if I made some wrong assumptions.
