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Started By
Message
Selling my house to a nephew and his fiancee
Posted on 2/2/21 at 6:45 am
Posted on 2/2/21 at 6:45 am
Without going into my whole life story, I’m going to be selling a house to my nephew and his fiancée. I have no mortgage on the house. It’s a cute little house in a cute little neighborhood but property value here isn’t high so I only paid a little over 100k, if the net is to be trusted at all (I’ll do more research) then the house is valued at somewhere around 140k.
I’m sure I need to speak with an attorney but I do not wish to make money on this. I have no mortgage on the house I live in now either which is wonderful of course but it’s because of some unfortunate happenings in my life that I’m sitting in this position so I’d gladly trade paying a mortgage but that’s neither here nor there. I would love to but I can’t give him the house because I can’t give all the other kiddos houses as I don’t have that many to give. Ha.
My question is what all things do I need to consider and possibly seek further advice on before deciding on a sell price.
I know I don’t want to hurt the property value or if they decide to sell themselves cause a massive gain for them. But I want to give him a very nice discount if at all possible.
I’m sure I need to speak with an attorney but I do not wish to make money on this. I have no mortgage on the house I live in now either which is wonderful of course but it’s because of some unfortunate happenings in my life that I’m sitting in this position so I’d gladly trade paying a mortgage but that’s neither here nor there. I would love to but I can’t give him the house because I can’t give all the other kiddos houses as I don’t have that many to give. Ha.
My question is what all things do I need to consider and possibly seek further advice on before deciding on a sell price.
I know I don’t want to hurt the property value or if they decide to sell themselves cause a massive gain for them. But I want to give him a very nice discount if at all possible.
This post was edited on 2/2/21 at 6:46 am
6
Posted on 2/2/21 at 6:59 am to piggilicious
why do you care about the property value if you will no longer own the house? Just sell it them for 100
no reason to complicate it
no reason to complicate it
Posted on 2/2/21 at 7:04 am to cgrand
Because it’s a small town and I know several folks that live in the neighborhood and I live in the same town I guess - but I don’t know I’m basically just trying to think through the whole thing and do what’s best. 
Posted on 2/2/21 at 7:04 am to piggilicious
quote:
I know I don’t want to hurt the property value or if they decide to sell themselves cause a massive gain for them. But I want to give him a very nice discount if at all possible.
The property value is the property value. Selling for $100 when it’s value is $140 won’t make the property suddenly only worth $100. I’m sure the next buyers may try to negotiate from there but it would be an easy thing to explain this situation and why the value is higher.
And don’t worry about gains. If they live there for at least 2 years, they aren’t going to pay taxes on the gain of selling the house (it would have to be a $500k+ gain for them to pay taxes)
This post was edited on 2/2/21 at 7:06 am
Posted on 2/2/21 at 7:08 am to Tigerfan56
Thank you, that’s what I needed to hear I guess. 
What if I sold for less than I paid - would that have any consequences to consider for either he or I?
What if I sold for less than I paid - would that have any consequences to consider for either he or I?
Posted on 2/2/21 at 7:14 am to piggilicious
quote:
What if I sold for less than I paid - would that have any consequences to consider for either he or I?
The only thing I can think of that may come into play here is gift taxes - which would be a potential consequence for you.
If you gave the house to your nephew for free, it would be considered a gift and you would have to pay taxes. I am unaware of the rules around selling a house below market value and if some of that could be considered a gift. You may want to look into that a little more.
This post was edited on 2/2/21 at 7:15 am
Posted on 2/2/21 at 7:22 am to piggilicious
You can sell them the house at $140 and do cashback at sell.
Posted on 2/2/21 at 7:23 am to Tigerfan56
Ok. On that note sorta, I was rolling around in my head. Maybe selling at price I bought it at then gifting them 10k where I could gift the rest of the kids the same amount for fairness plus keep a little of it myself with no tax consequences (since gift up to 15k per right?)
Hmm. I should have been thinking this all through for the last few months since I’ve known it was going to happen but instead I wait until basically the last minute so my mind has to go into overdrive.
Thanks again for your input.
Hmm. I should have been thinking this all through for the last few months since I’ve known it was going to happen but instead I wait until basically the last minute so my mind has to go into overdrive.
Thanks again for your input.
This post was edited on 2/2/21 at 7:25 am
Posted on 2/2/21 at 7:28 am to piggilicious
Cut a deal with them that when they sell the house you get a cut of the profit?
For you to sell it at 100k instead of 140k, and maybe put an X amount of time on them staying there.
As it seems like you want them to be there a bit, and not just flip it.
For you to sell it at 100k instead of 140k, and maybe put an X amount of time on them staying there.
As it seems like you want them to be there a bit, and not just flip it.
Posted on 2/2/21 at 7:36 am to Tigerfan56
quote:
The property value is the property value. Selling for $100 when it’s value is $140 won’t make the property suddenly only worth $100.
So, it would not hurt comps at all if you sold at 25% less than FMV? I thought realtors and banks largely base value on comps. I have obviously been wrong a long time with my way of thinking of what you say is true. My realtor also has some explaining to do!
Posted on 2/2/21 at 7:41 am to go ta hell ole miss
No, I sold a house in a neighborhood where the couple across the street sold their house for 30k less than the appraisal. It sold in less than a week so it wasn't a good comp.
Posted on 2/2/21 at 7:49 am to piggilicious
Sell it for 100k. With current interest rates, their note will be cheaper than any apartment. Seems like a great deal for both sides. You get your money back and they get a cheap note plus 40k in equity.
Posted on 2/2/21 at 7:52 am to BobRoss
quote:
You can sell them the house at $140 and do cashback at sell.
I guess I need to look into that- aside from the basic meaning I don’t know any of the intricate details of it.
Posted on 2/2/21 at 7:53 am to tke_swamprat
Thanks for the input
Posted on 2/2/21 at 7:54 am to piggilicious
I've done a buy like this. You sell the house at one price and give a check designated for improvements or whatever at closing. That way you retain the higher sell price.
Posted on 2/2/21 at 7:59 am to piggilicious
I bought my first house from a family member. Similar situation.
Because you are family you can sell the house for $140k to them and “gift” whatever amount you want in equity. They pay $100k and the $40k in equity you gifted is then used as their down payment.
The final sale price will show $140k if you are concerned with property values.
You don’t need an attorney but the mortgage company will know how to handle this.
You will also need to claim this on your taxes as a gift. However you can gift several million in your lifetime.
Because you are family you can sell the house for $140k to them and “gift” whatever amount you want in equity. They pay $100k and the $40k in equity you gifted is then used as their down payment.
The final sale price will show $140k if you are concerned with property values.
You don’t need an attorney but the mortgage company will know how to handle this.
You will also need to claim this on your taxes as a gift. However you can gift several million in your lifetime.
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