I want to buy my parent's house for 95000 but the house was appraised at 266000. I am trying to do a purchase contract. Is it possible to put the selling price as 200000 and that they are giving me a gift of equity of 105000 or do I have to stay as close to the appraisal number?
2007-02-08 03:43:34 · 6 answers · asked by flaca 1 in Business & Finance ➔ Renting & Real Estate
You Can do the 200,000 and have a gift for 105,000. You do not need to use the appraisal number. FYI you should have the sales price at at 125,000. It will still have you under the 20% you need plus you parents will pay less in taxes.
2007-02-08 04:23:45 · answer #1 · answered by s_uperdave 3 · 0⤊ 0⤋
I think if you're single, your parents (as a couple) can only give you $24,000 per year without paying gift taxes. If they give you $100,000 there will be a big tax bill (see the link).
So, just setting a low price might be a better idea.
The consequenses of a wrong decision here are huge, and laws have changed in the 2001 tax reform bill. It would be wise to consult a tax attorney. You can probalby get a 5 minute phone call for free.
2007-02-08 12:21:57 · answer #2 · answered by pmk 2 · 0⤊ 0⤋
The appraisal is for your's and your financing company's information to 1) Make sure you are not overpaying for a house and 2) Allow the financer to know if it makes sense to make the deal. They will not loan more than a certain percentage of the value in case the need to foreclose.
If you are not financing then it deasn't matter what the appraisal says, write the contract for the actual purchase amount.
2007-02-08 03:53:59 · answer #3 · answered by meathookcook 6 · 1⤊ 0⤋
I would call it a 118,750 purchase price with a loan amount of $95,000. That is exactly 20% down. So it would be a 20% gift of equity. This would keep your parents taxes down(if they would have to pay capital gains, doubt it if it was their principal residence 2 of the past 5 years) and hopefully keep your property taxes down in the future(based on the purchase price). Tax collecter may raise your taxes based on market value though because you did buy from family. Good luck.
2007-02-08 09:02:15 · answer #4 · answered by pontooner 2 · 0⤊ 0⤋
we actually did this, where we bought my Grandmas house for a lower than appraised value. You may still have to come up with a down payment if you are getting a mortgage and you will still have to pay closing costs. I would check with a lawyer and see what would be required. we still had our down payment and closing costs but were able to get the mortgage for the appraised value that way we could use some of the equity that was built up already. Good luck. Plus check out a mortgage broker, they know all the ins and outs of that.
2016-03-28 22:10:54 · answer #5 · answered by Anonymous · 0⤊ 0⤋
No one, not even the government, can change the terms and conditions of a legally binding contract between two US citizens as long as it is legal. The issue of the value is what a buyer is willing to pay and what the seller is willing to accept not what someone else says it is worth.
Buena Suerte
2007-02-08 03:49:41 · answer #6 · answered by newmexicorealestateforms 6 · 1⤊ 0⤋