Homeowners might be interested in selling their home to a family member rather than to a stranger. Sometimes, this is because they want to avoid the inconvenience of finding a suitable home buyer. If this is something you are considering, here’s how to sell a house to a family member.
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Can You Sell Your Home to Family Members?
People can sell their homes to their family members. However, there are strict rules and regulations in place to prevent fraud and other serious issues with such real estate transactions.
Due to this, homeowners who make a mistake when selling a home to a family member runs the risk of paying more taxes and other serious penalties.
Can You Short Sale a House to a Family Member?
In most cases, lenders will not permit a homeowner to short sell their home to a family member because of the fear that said individual will benefit from the real estate transaction.
However, there have been exceptions to this rule, meaning that interested individuals might want to ask their lenders anyways if they feel that they have no better options.
It is important to note that a lender permits the homeowner to short sell their home because it believes that there is no better option for it.
After all, a short sale means that the expected sale proceeds won’t be enough to cover the remainder on the mortgage, meaning that the lender will be taking a considerable loss.
As a result, interested individuals can expect their lender to be thorough about making sure that there are no better options.
Under normal circumstances, homeowners who choose to short sell their home will be asked to sign an
In short, this is an assurance that the buyer and the seller are not associated with one another.
Furthermore, this is an assurance that the buyer and seller are not cooperating with one another in secret but are instead both bargaining for the sake of their respective self-interest to the best of their abilities.
However, it is possible for homeowners to convince the lender to grant them an exemption to the arms-length affidavit.
The chances are not high because lenders will be suspicious of the homeowner’s motive, which is why such individuals must be prepared to provide plenty of evidence to support the claim that selling their home to their family member is the best option that is available to them.
Furthermore, once homeowners have managed to short sell their home to a family memberthey should know that they will not be permitted to benefit from the short sale in any way such as being able to rent the home that was short sold.
Can You Gift Property to a Family Member?
Interested individuals can give their property to a family member as a gift. However, there is an annual exclusion limit on gifts, which is $15,000 for both 2018 and 2019 but could see changes in subsequent tax periods.
Regardless, should the value of a gift exceed the annual exclusion limit on gifts, interested individuals can expect to pay taxes on the rest.
Can I Sell My House to a Family Member Below Market Value?
Homeowners can sell their house to a family member for less than fair market value so long as they have paid off their mortgage.
However, the government has serious concerns about people seeking to bypass estate taxes by just giving their property to their family members, which is why there are rules and regulations that can kick in under such circumstances.
For instance, when a homeowner chooses to sell a house for less than its fair market value, the difference between the sale price and the fair market value is considered to be a gift for tax purposes.
As a result, someone who exceeds their annual exclusion limit can expect to pay taxes on the amount that is in excess.
Can I Sell My House to a Family Member For 1 Dollar?
It is possible for homeowners to sell their house to a family member for $1 because they can charge whatever they want so long as they own it in full.
However, this tends to be a bad idea because this means that they will be giving a huge gift to their family member from a tax perspective, meaning that they can expect to pay a huge sum in taxes because of it.
How Do You Transfer Property to a Family Member?
There are a number of ways by which people can transfer property to family members. However, each one has its own upsides and downsides.
Meanwhile, another person might choose to make a family member a joint owner of the property, which could result in serious complications should the relationship between said individuals become strained for whatever reason.
How to Sell a House to a Family Member without a Real Estate Agent?
Real estate transactions are real estate transactions, which is why people can sell their homes to their family members without the involvement of a real estate agent so long as they are prepared to run through each of the necessary steps on their own.
For example, this means that they will need to hire a home appraiser to appraise their home to get a fair market value for it, which is something that is going to
Furthermore, this means filing various legal documents, which will be necessary to make sure that everything goes as smoothly as possible.
Unsurprisingly, this can get pretty complicated, which is why it is generally not a good idea for interested individuals to attempt to handle such matters on their own.
Interested individuals need to give careful thought to whether they should bring in a real estate agent anyways even though they are selling to a family member.
Most real estate agents work on a commission, which is why most interested individuals will be reluctant.
However, there are those who might be willing to handle such cases for a flat fee as well, which can provide interested individuals with some much-needed expertise and experience on their side while minimizing their costs in the process.
There are other real estate professionals whose services can prove invaluable, with an excellent example being a real estate lawyer who can tell interested individuals about all of the necessary steps.
They help them file documents for all of the required steps, and help them from stepping into the many, many potential pitfalls along the way.
Considering how easy it is for people to run afoul of the relevant rules and regulations when engaging in real estate transactions between family members because of the government’s concern over fraud and other issues.
Being absolutely sure that they won’t be running into such issues is worth spending some money in the meantime.
A real estate agent is still the best option because they possess the broadest expertise and experience on the matter, which should make for the best results.
Moreover, they can point interested individuals to other real estate professionals as needed because of their connections, meaning that they can step up even when their own capabilities fall short.
Medicaid When Selling a House to Family
Medicaid can seek to recover some of its costs from the estate of a Medicaid user.
It might be possible for Medicaid users to protect their property by selling it to a family member.
But it is by no means guaranteed that this will prove to be the best course of action because of the potential impact on their chances of getting Medicaid as well as the potential tax implications for the family member.
As a result, researching the options is recommended for optimal decision-making on the matter.