Ask Me Help Desk

Ask Me Help Desk (https://www.askmehelpdesk.com/forum.php)
-   Real Estate Law (https://www.askmehelpdesk.com/forumdisplay.php?f=29)
-   -   OH-how to avoid paying the taxes for the house I purchased for my son (https://www.askmehelpdesk.com/showthread.php?t=653277)

  • Apr 22, 2012, 07:33 AM
    lorrieh
    OH-how to avoid paying the taxes for the house I purchased for my son
    I purchased a home 2 years ago for my son's family. They want to sell it now and use the sale money for his next home. The house should sell for about 42K. I bought it for 14K. I only want the purchase price back so as not to have to pay taxes for money made on the sale and for them to use the excess for their next purchase. Can I just make a note stating that they must pay me the 14K for a loan I made to them (in ecense, I am like a mortgage company to them) rather than actually putting the house in their name (ie. Quit claim).
  • Apr 22, 2012, 12:38 PM
    AK lawyer
    Quote:

    Originally Posted by lorrieh View Post
    I purchased a home 2 years ago for my son's family. They want to sell it now and use the sale money for his next home. The house should sell for about 42K. I bought it for 14K. I only want the purchase price back so as not to have to pay taxes for money made on the sale and for them to use the excess for their next purchase. Can I just make a note stating that they must pay me the 14K for a loan I made to them (in ecense, I am like a mortgage company to them) rather than actually putting the house in their name (ie. quit claim).

    If the house is sold while it's in your name, I think that you will have to pay capital gains tax on the $10K profit. But if, before it is sold, you convey the property to them, and they give you a $14K note secured by a mortgage, it would probaby be a wash, income-tax wise. And, as I recall, the extra $10K would be within the annual exclusion amount for gift tax purposes.

    But run this by a tax professional to be sure.
  • Apr 22, 2012, 01:05 PM
    ScottGem
    If the house is in your name when sold, then it the gain on the sale is your taxable income. However, you could just have your son reimburse you.

    To avoid the taxes, you can use AK's suggestion. The note for 14K will become a lien on the property. At the closing you get a check for the $14K.

  • All times are GMT -7. The time now is 09:15 PM.