House gifted

[jamfra]

What is the name of your state? Louisiana

We live on an acre and a half of land. The land around us is undeveloped but the owner is looking to develop the land into a subdivision. We have the corner and we are being told that with out our property he can not develop that land. He is offering to build both me and my mother in law each a house as a trade for access to the land. We are meeting with the land owner on Monday to discuss this and I want to make sure I have as much information as possible. What sort of questions do I need to know to make sure that we are not taken advantage of? I have read about gift taxes but do know really know how that would apply. Basically I want to make sure that this "free" house doesnt end up costing me thousands of $$$. How can we make sure that a "free" house is actually "free"? Thanks

 

[abezon]

It isn't free. The developer is trading you 2 houses for access rights. You are essentially selling an easement. I strongly recommend you hire a real estate attorney to broker the deal & write the contract. Among other things, you need to have some way to control the quality of house you get, a budget for fixtures, what to do if there's a disagreement, fix the value of the houses, etc.

The value of the houses you receive is the proceeds from the easement sale & you need to pay taxes on it on Schedule D. Unless you get really creative, you'll pay $$ thousands in taxes. OTOH, you'll have a brand new house & could get a home equity loan for the tax bill, essentially allowing you to buy the house for $20-30k.