In the current real estate market, it is difficult if not impossible for young individuals to purchase a home on their own. Often times, parents will step in to help by selling or gifting one of their homes to their child. This is a great tool that allows parents to provide their child with a home and also allows the child to own a home without competing in the real estate market. But, there are significant tax consequences that should be considered before completing a sale or gift.
As with any real property transfer, proper paperwork is crucial even if it is a transfer between a parent and child. To sell real property, the parties involved should always have a purchase agreement accompanied with a promissory note and deed of trust if the purchaser cannot pay off the purchase price in one lump sum. If someone provides a gift of a home, a gift tax return will be required.
In addition, and upon transfer of the real property, the seller must execute a grant deed and in the case of parent child transfers submit the proper and necessary forms to claim the parent child exclusion against reassessment of property taxes.
Here at Chauvel and Glatt, we assist families in real property transfers to ensure it is a smooth process. To find out how our estate attorney can assist you, contact us today.
This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500.