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My house is paid off.my son was qualified for a mortgage loan .can I sell the house to him?

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December 23 2011 - Palmdale
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Answers (7)

SoCal_Engr asked the right question, "What is the purpose of the sale?" A quit claim deed will transfer the "Title" to your son at the time it is signed. He would then take the quit claim deed to the county recorders office to have it recorded ($15-25 depending on the county.) Quick and simple, but, the down side is that he would be accepting any other claims to the title as his, for example an unknown mechanics lien (this can be avoided by purchasing title insurance.) His basis for income tax purposes begins at the time of transfer at the value as of that date.

Another method is to put your son on title as a joint tenant. This way when you die, he will get the remaining portion of the title at the stepped up value and have the original portion at the value it was at the signing date.

If you are concerned about the money, you could sell it out-right to him at a reduced value and have him get a loan. OR, you could "carry the note" and have him make payments to you and when you die the remaining money owed could be willed to him.

You need to decide which senerio appeals to you the most and then go see a CPA who would likely charge less than an attorney. If your decision involves a will or trust, I suggest that you speak with an estate and trust attorney. As a broker I will tell you that an agent can help you through the sale transaction, but it is not necessary, you could do it yourself.
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January 07 2012
Profile picture for SoCal Engr
What is the purpose of the sale? Property transfer? Income?

I haven't looked into the real-world mechanics, but you should talk to a CPA or tax attorney about your possible options. I am neither, and you shouldn't take anything I say as gospel. However, if I were trying to figure out a way to do this and retain as much $$$ as possible...
 
A possible scenario...

You could "gift" your house to your son via a quit claim - and he inherits the cost basis. It will exceed the annual gift exclusion, but you could claim the gift and offsetting tax credits on your tax return (essentially, you're counting this against any future estate transfer). Your son can "gift" you up to $13K per year, and you wouldn't have to claim it as income. Your son could also gift your spouse, bring the "gift exclusion" to $23K/yr.

If it is workable, it could make things much simpler by getting the government out of the deal.
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December 24 2011
norm- As Sharon mentioned. Although I would also speak with a CPA or Income Tax Professional in regard to possible tax obligations you may be subject. ... Best wishes and happy holidays, Rudi
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December 24 2011
You don't need a Realtor to help you with this transaction, use an attorney or title company. 
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December 24 2011
Do you need the money now? You could always have an attorney draw up an owner financing contract and your son could get a great mortgage rate and you could add to your retirement portfolio @ 3.5% to 4% per year.

Consult a CPA and CFP to see what will benefit you the most, but selling a paid off property to a family member as a standard purchase is probably not the best use of your paid off asset.

IMHO
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December 23 2011
Profile picture for wetdawgs
Yes, indeed.   As you've identified a buyer, it tends to be much less expensive use an attorney to write up the sales contract than an agent who charges a percentage of the market value of the home.   If you chose to use an agent, negotiate hard for services rendered and not a commission.
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December 23 2011
Absolutely! First, find out the market value through a comparative market analysis. This can be obtained by a Realtor and it is free of charge.

Secondly, Ask to see the pre-approval letter from the mortgage specialist who qualified your son. This will tell you hoe much your son can pay for the house.

Lastly, have a Realtor write up the sales contract.
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December 23 2011
 
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