No, they should sell it to me!! :-)
I agree with the above, they can.
2006-10-16 10:28:57
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answer #1
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answered by ezgoin92 5
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No, they cannot. As someone else stated, the IRS looks closely at sales to relatives, to make sure they did not sell under market. Of course, they may not catch it.
Why don't you make them an offer of $700k, with them holding the mortgage? They could give you an interest-only mortgage. At $700k, the $500k exemption for a married couple would mean they own no capital gains on the sale. And The IRS would have a hell of a time trying to prove the house would have sold for more in the current housing market.
2006-10-17 05:00:12
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answer #2
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answered by Dave 4
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they earned 100k and that is earned income and by undervaluing the house they are breaking a federal law ( plan for an IRS audit )
but they can use the 100k to purchase a new house ( one time only ) and avoid taxes
the value is set by the market but selling to a relative will raise flags - not all violations of the law are prosecuted ( they must prove that they did it to avoid a tax burden ) ( if you are aware of the true value then you also will be a law breaker - the extra value is subject to a gift tax and should be declared as income )
LAST THOUGHT all of the above depends on the value of the house as far as the feds are concerned ( unless they audit ) the value is the selling price - people get away with this all the time but beware if you have ( or they have ) a history of tax problems - you may be flagged
2006-10-16 10:23:19
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answer #3
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answered by Anonymous
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What you are asking is if they will be taxed on a "gift of equity" in the amount of $500K.
Partly, it depends on what kind of donations they've given during their lifetime-- there's a ceiling before taxes come into play.
They need to consult their tax guy to get the exact low-down. YOU wont pay taxes on the gift but they may have to.
2006-10-16 11:26:28
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answer #4
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answered by Anonymous
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Why don't they sell it for $800,000 ? If old enough they won't have to pay a tax penalty. Plus you are allowed one sale without penalty if the gain is used to buy another house within two years.
2006-10-16 10:25:58
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answer #5
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answered by Anonymous
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They can't sell it to you for less then the appraissal value...I have yet to find a bank that would allow such a transaction.
If you want to transfer ownership you should look into Transfer of Deed or adding yourself to the title.
Either way you will have to face paying taxes.
2006-10-16 11:29:20
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answer #6
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answered by Jen G 3
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Yes they can but why not let them sell it for 800k and have them give you the money, that would make more sense. Why lose out on 500K, unless you are planning to sell it.
2006-10-16 10:24:02
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answer #7
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answered by TrueLibra 2
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Absolutely, Yes ... as long as the following four statements apply:
1. I owned and used the residence as my principal residence for 2 or more years during the 5 year period ending on the date of the sale or exchange of the residence.
2. I have not sold or exchanged another principal residence during the 2 year period ending on the date of the sale or exchange of the residence (excluding any sale or exchange before May 7, 1997).
3. No portion of the residence has been used for business or rental purposes by me (or my spouse if I am married) after May 6, 1997.
4. At least one of the following three statements applies:
The sale or exchange is of the entire residence for $250,000 or less,
-or-I am married, the sale or exchange is of the entire residence for $500,000 or less, and the gain on the sale or exchange of the entire residence is $250,000 or less,
-or-I am married, the sale or exchange is of the entire residence for $500,000 or less, and (a) I intend to file a joint return for the year of the sale or exchange, (b) my spouse also used the residence as his or her principal residence for 2 years or more during the 5 year periodending on the date of the sale or exchange, and (c) my spouse also has not sold or ex-changed another principal residence during the 2 year period ending on the date of the sale or exchange (excluding any sale or exchange before May 7, 1997).
2006-10-16 11:51:05
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answer #8
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answered by BoomChikkaBoom 6
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THey would still have capital gains of $100K. Unless they were to spend the entire 300K on the next house. BTW, are they looking to adopt an ab fab daughter?????
2006-10-16 10:23:22
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answer #9
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answered by Jenyfer C 5
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yes a married couple is except 500k with no tax penalty
2006-10-16 10:24:24
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answer #10
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answered by gerry22122 4
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