What are the federal income tax consequences of selling real estate to a relative?

Question

We built a house which we plan to sell to our son. We just want to break even on the sale.

Answer 1

1) If you make a profit, it is taxable as normal.

2) If you have a loss, it is not deductable as it was sold to a related party.

3) If you sell it below fair market value, you may have to file a Gift Tax return for the difference between the fair market value and the selling price.

Answer 2

Any profits from the sale of your duplex can likely avoid capital gains tax if they are reinvested into your new home on your separate parcel. Most likely the profits earned from selling the additional land to the developer of the mini farms would be subject to capital gains taxation. Only a tax professional can answer these questions for sure but that is the general way it works.