| Best way to sell my sister land |
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foodeefish
Contributing Member
Cash: $ 6.00
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Joined: 07 Feb 2004
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| Best way to sell my sister land |
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I purchased two water front lots next to each other 3 years ago and I would like to sell one of them to my sister. When I purchased the two lots, the realtor and/or lawyer documented that the sale was for one lot and not for the two and the price paid for the lot was $88K and not $44K each. Because of this, anyone that has put their lot on the market is asking over $90K. We contacted the lawyer, the realtor and the county and no one is willing to make the records up to date to reflect the true price.
What is the best way to sell one of the lots to my sister keeping in mind I am in the 33% tax bracket and she is in the 25% bracket? Should I sell it to her for $10 as others have done to save on taxes or is there a more effective and efficient way to do the sale?
Thanks
Fooodeefish
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Thu Nov 08, 2007 2:04 am |
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No-Brainer
Senior Member
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Location: Oregon USA
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If they have it recorded as one lot, you can't sell it to her at all unless you subdivide it, can you?
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Fri Nov 09, 2007 9:56 pm |
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foodeefish
Contributing Member
Cash: $ 6.00
Posts: 26
Joined: 07 Feb 2004
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Yes they are already separatee pieces of land so subdivided is complete
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Sat Nov 10, 2007 8:52 pm |
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efflandt
Senior Member
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Location: Elgin, IL USA
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If they documented $88,000 for one lot, what did they document for sale of the other lot? And what were they trying to achieve by doing that? You may have unwittingly increased your tax assessment and property tax.
Somthing to be aware if is that if you sell something for significantly less than fair market value, the IRS may consider the difference a gift. The annual gift exclusion from each person to each person is currently $12,000/yr. Any more than that and the gift giver would have to file a gift tax form, although, there would not likely be any tax due (unified lifetime exclusion). Since it is person to person, there is a way to pass more than that without a tax form if you have a wife and/or she has a husband (up to $48,000 from pair to pair).
You giving her a gift, and her giving you a seemingly unrelated gift (which may alos require gift tax form from her), might raise some eyebrows.
If you do not follow proper procedures, it could come back to haunt you (or shift the tax burden to your sister at some future date when she sells).
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Sat Nov 17, 2007 10:38 pm |
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