Tax Questions

[katieg376]

What is the name of your state? NJ

My mother-in-law offered to sell her home (she lived there for over 30 years) to my husband and myself. The home is worth approx. $350K. She offered to sell the home for $180K. She is using the proceeds from the sale to purchase a smaller home in a retirement community. Are there any tax consequences resulting from the above scenerio. Will my husband and I need to pay a gift tax?

Secondly... in the process of applying for a mortgage,, the lender is trying to avoid the 100% financing. He proposed Mom selling the house for $235K and my husband and I would have a mortgage for $188K. He said Mom would give us a gift of equity in the amount of $55K. Would Mom be responsible for Capital Gain Tax? Or are there any tax consequences?

Thanks

[Snipes5]

Mom will have to file a gift return for the difference between the Fair Market Value and what she sells it to you for. No gift tax will be due, but she will have to file it.

If she sells you a $350K house for $180K, you have PLENTY of equity already, because she is gifting you $170K. PMI is based on "loan to value", and with a $180K mortgage your LTV will be 50%. That's fine.

Snipes