If you are wondering how to sell a home to a family member, a huge congratulations is in order. You have found a buyer for your home! The most tedious part of the home-selling process is already finished. But how do you actually sell a piece of real estate to a family member?
Hire a real estate agent
It could be tempting to bypass the regular process of hiring a real estate agent to broker the deal. But seemingly simple and straightforward real estate transactions could get testy, especially when the home buyer is a family member. Hiring an agent to help you through the negotiation process could actually make things easier while keeping the family happy.
Although real estate agents usually work on a commission basis, if you and your family member have already agreed on the listing price, you might be able to find one who will work for a flat fee to help you through the process since the real estate agent does not need to spend time marketing the property because you already have a buyer!
Hire an appraiser
Even if you have agreed upon a selling price, you will need to have the home appraised if your family member is seeking a home loan. Lenders usually require appraisals to ensure the home value is high enough to match the value of the mortgage.
Hire an attorney
Experts say you must hire a real estate attorney to help guide you through the process as you sell your home to a family member.
Having some kind of legal oversight for the largest single transaction both sides are ever going to make is more than reasonable.
An attorney can bring clarity if any legal issues arise during the sale of the home. An attorney can also perform a title search to see if there are any liens on the property or if zoning prohibits your family member from making any future improvements on the house.
Do you need to pay gift tax if you sell a home to a family member?
You might want to give a family member a break on the price of the home. But don’t be too generous.
There are tax consequences if you are selling a home to a family member at a less than fair market value because rules are put into place specifically to keep people from avoiding the federal estate tax and giving away their assets.
So that sweet deal you cut your family member is actually seen by the IRS as a gift and any discount in price will be subject to a federal gift tax. If you sell your house to a family member for less than the market value, it is considered a gift.
The IRS allows anyone to give up to fourteen thousand dollars per year to any number of people without having to pay gift taxes. So if your house’s value is fourteen thousand dollars or under, you will not have to pay the taxman. Any amount over that means you will have to buck up come tax day.
Do you need a real estate agent in the Rocklin area? Click here to contact Kortney Williams today!