Family transfer of real estate properties

[bearishgurl]

[quote=SK in CV][quote=Mooki]OK, my mom is not gifting me $25K. I loan her $25K over a few years of helping her out. This is a few thousands here and there. Some are not directly to her but checks to her realtor and persons fixing her house etc. Now she wants to pay me back the money she owes me, either from the proceeds of selling the house or through giving me part of the interest/equity of the house (since the house does not sell). How do we make it clear to the IRS it is a loan repayment and not a “gift”?[/quote]

In that case, a quit claim deed probably wouldn’t be appropriate. You are buying the house (or an interest in it) in exchange for extinguishing the debt. I don’t know about GA laws, but in CA, you would buy the property with a written contract specifying the sales price for the interest you’re buying. Make sure the contract specifies the amount of debt you’ll be assuming in addition to your payment to her. Your payment being the debt being extinguished. (A written contract is required for a sale, but not for a gift.) A grant deed would be more appropriate. It would be a reportable sale for your mother (though not necessarily taxable, she’s entitled to the primary residence exclusion if there is a gain.) The IRS won’t have any problem with it.[/quote]

In this type of conveyance, SK, Mooki would get title insurance. She would be able to put a provision in her “purchase contract” that she approve the preliminary report as a condition of sale. Then and only then would she know if there is sufficient equity in it to repay what her mom owes her. IMO, she should also have a NEW appraisal done and make that a contingency as well. Of course, if she has to secure new financing to pay off her mom’s loan, then the appraisal will be mandatory.

[Coronita]

[quote=bearishgurl]
As SK in CV stated, there’s no tax on this level of gifting. I am unfamiliar with many tax laws but in this case, whether or not it is actually considered a “gift” by the IRS is moot.

-This post should not be construed as legal advice and I am not an attorney.-[/quote]

In this particular case, I would agree. But, I just wanted to clarify with other lurkers that in general there is a “gift” consideration when doing a quit claim (whether one actually hits the $1million lifetime exclusion is a separate discussion). You simply cannot deed an entire house over to a kid and not expect it won’t count against the respective estate tax limits (whether you actually hit it or not)… Like I said, *drat*. And, yes it is entirely possible to exceed the estate tax limits if you factor in life insurance benefits paid to your heirs after you die. (though there are some interesting rules around those things too, if I recall…)

[Coronita]

[quote=bearishgurl]
As SK in CV stated, there’s no tax on this level of gifting. I am unfamiliar with many tax laws but in this case, whether or not it is actually considered a “gift” by the IRS is moot.

-This post should not be construed as legal advice and I am not an attorney.-[/quote]

In this particular case, I would agree. But, I just wanted to clarify with other lurkers that in general there is a “gift” consideration when doing a quit claim (whether one actually hits the $1million lifetime exclusion is a separate discussion). You simply cannot deed an entire house over to a kid and not expect it won’t count against the respective estate tax limits (whether you actually hit it or not)… Like I said, *drat*. And, yes it is entirely possible to exceed the estate tax limits if you factor in life insurance benefits paid to your heirs after you die. (though there are some interesting rules around those things too, if I recall…)

[Coronita]

[quote=bearishgurl]
As SK in CV stated, there’s no tax on this level of gifting. I am unfamiliar with many tax laws but in this case, whether or not it is actually considered a “gift” by the IRS is moot.

-This post should not be construed as legal advice and I am not an attorney.-[/quote]

In this particular case, I would agree. But, I just wanted to clarify with other lurkers that in general there is a “gift” consideration when doing a quit claim (whether one actually hits the $1million lifetime exclusion is a separate discussion). You simply cannot deed an entire house over to a kid and not expect it won’t count against the respective estate tax limits (whether you actually hit it or not)… Like I said, *drat*. And, yes it is entirely possible to exceed the estate tax limits if you factor in life insurance benefits paid to your heirs after you die. (though there are some interesting rules around those things too, if I recall…)

[Coronita]

[quote=bearishgurl]
As SK in CV stated, there’s no tax on this level of gifting. I am unfamiliar with many tax laws but in this case, whether or not it is actually considered a “gift” by the IRS is moot.

-This post should not be construed as legal advice and I am not an attorney.-[/quote]

In this particular case, I would agree. But, I just wanted to clarify with other lurkers that in general there is a “gift” consideration when doing a quit claim (whether one actually hits the $1million lifetime exclusion is a separate discussion). You simply cannot deed an entire house over to a kid and not expect it won’t count against the respective estate tax limits (whether you actually hit it or not)… Like I said, *drat*. And, yes it is entirely possible to exceed the estate tax limits if you factor in life insurance benefits paid to your heirs after you die. (though there are some interesting rules around those things too, if I recall…)

[Coronita]

[quote=bearishgurl]
As SK in CV stated, there’s no tax on this level of gifting. I am unfamiliar with many tax laws but in this case, whether or not it is actually considered a “gift” by the IRS is moot.

-This post should not be construed as legal advice and I am not an attorney.-[/quote]

In this particular case, I would agree. But, I just wanted to clarify with other lurkers that in general there is a “gift” consideration when doing a quit claim (whether one actually hits the $1million lifetime exclusion is a separate discussion). You simply cannot deed an entire house over to a kid and not expect it won’t count against the respective estate tax limits (whether you actually hit it or not)… Like I said, *drat*. And, yes it is entirely possible to exceed the estate tax limits if you factor in life insurance benefits paid to your heirs after you die. (though there are some interesting rules around those things too, if I recall…)

[Mooki]

Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).

[Mooki]

Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).

[Mooki]

Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).

[Mooki]

Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).

[Mooki]

Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).

[Coronita]

[quote=Mooki]Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).[/quote]

There is something wrong with this country, but not specifically in your case…..

[Coronita]

[quote=Mooki]Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).[/quote]

There is something wrong with this country, but not specifically in your case…..

[Coronita]

[quote=Mooki]Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).[/quote]

There is something wrong with this country, but not specifically in your case…..

[Coronita]

[quote=Mooki]Thanks everyone! I have to rethink it through. At this point, getting a new appraisal, a new realtor, and trying to sell ASAP seems to be the best.

Since mom and I have an agreement (not written) that the money I sent her over the years are loans, I have been keeping good record of every checks I sent her and every bill I paid for her. When the house is able to sell, she will pay me back that $25K as much as possible. With the checks to show that the money was loaned to her in the first place, her repayment to me should not be considered as gift. If the government is to tax on children helping their elderly parents because social security and Medicare suck, there is something wrong with this country (or am I stating the obvious?).[/quote]

There is something wrong with this country, but not specifically in your case…..

[Author]

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