Sister wants to buy my half out of house-Best way to proceed?

[deltadart1]

From what i'm reading were a little confused about the fact's(I'm at fault). Just checked and the house was valued at $105,000 at inventory time. My sister and I are co-owners. She wants to buy it and live in the house. I (her brother) and my sister have agreed to a selling price of $90,000. My half would come to $45,000. I was told to check on doing a "Quit Claim Deed". Doing it this way would just remove me from having any ownership of the house. She would not need to get a mortgage to give me my half. She has already talked to her bank and they said they could let her have the money by just doing a home equity loan.

The house she lives in now is paid off. I got in touch with a real estate attorney today and he said he would need the abstact and he would bring that up to date. He said the Quit Claim Deed can be done. The total cost for him to do this is a little less than $350. Forget the $25,000 figure I had used earlier. It was a big mistake on my part. The $90,000 sale price and my half would total $45,000. With these figures would there be any reason a gift tax would figure into the situation? Bottom line is my sister wants the house and I don't. All I want is my 50% share. Thanks.

 

[curb1]

You asked, "... would there be any reason a gift tax would figure into the situation?"

No. Do this deal and forget it.

Just out of curiosity, have you run the address on Zillow.com to find out what that estimate of value is?

 

[tranquility]

From what i'm reading were a little confused about the fact's(I'm at fault). Just checked and the house was valued at $105,000 at inventory time. My sister and I are co-owners. She wants to buy it and live in the house. I (her brother) and my sister have agreed to a selling price of $90,000. My half would come to $45,000. I was told to check on doing a "Quit Claim Deed". Doing it this way would just remove me from having any ownership of the house. She would not need to get a mortgage to give me my half. She has already talked to her bank and they said they could let her have the money by just doing a home equity loan.

The house she lives in now is paid off. I got in touch with a real estate attorney today and he said he would need the abstact and he would bring that up to date. He said the Quit Claim Deed can be done. The total cost for him to do this is a little less than $350. Forget the $25,000 figure I had used earlier. It was a big mistake on my part. The $90,000 sale price and my half would total $45,000. With these figures would there be any reason a gift tax would figure into the situation? Bottom line is my sister wants the house and I don't. All I want is my 50% share. Thanks.

What the house was valued at inventory time is relevant only to income taxes. (If the valuation is supportable.) What the house is worth now is the question. If you go to www.zillow.com as curb1 mentioned, what is the estimated value?

 

[deltadart1]

Tried zillow and I could not bring up the house so I went to the county assessor site. It said the dwelling is $86,000 and the land is $16,000 for a total of $102,00. I don't know how accurate the assessor's figures are but I will have to assume there pretty close.

 

[curb1]

Not necessarily, county assessments can be far from accurate. Was this the assessed value or the fair market value?

 

[deltadart1]

The house is not on the market at this time. Maybe that's the reason I could not find it on zillow.com. The only figures that I have is what the county assessor uses for property taxes and that figure is $102,000. There is also a bare lot that will be sold with the house and it comes in at $3500. Sorry but this is the only figures at this time I can come up with.

 

[tranquility]

The house is not on the market at this time. Maybe that's the reason I could not find it on zillow.com. The only figures that I have is what the county assessor uses for property taxes and that figure is $102,000. There is also a bare lot that will be sold with the house and it comes in at $3500. Sorry but this is the only figures at this time I can come up with.

You need to estimate the fair market value of the house to get any more of an answer. The assessed value has no meaning to this situation.

Here's the deal.

You are selling 1/2 of the house to sister for money.

You have a "basis" in the house of the fair market value of the property (Well, 1/2) at the time you inherited it. I assume that is what the number in probate was, but I don't know if that was done by a referee or someone just made a ballpark guesstimate.

The house has a fair market value today. This is important for sister in determining her basis in the property and to you in determining if you need to file a gift tax return.

If this were a true sale, where you were not related to the purchaser, the amount you got paid for the 1/2 would be the current fair market value (FMV) by law. However, this is your sister. You can't determine the fair market value by the money paid or what your agreement was. Many reasons for this. But, trust me, you can't. So, you need to get some realistic estimate for the value of the house. Find a realtor. Maybe try trulia. Find some way to get an estimate of the value.

If you get more than 1/2 of the FMV when you inherited the house as payment for your 1/2 now, you have a capital gain. If an arms length sale, if you got less, you would have a capital loss. Here, if you get less than the CURRENT FMV, you have given a gift to your sister for that amount. In 2013, you can give up to $14,000 to a person without having to file a gift tax return. If the amount you are being paid is more than $14k less than the current FMV you have to file a return. You will not have to pay any tax on the gift. It is only to track such things so people don't get around estate taxes by gifting things before they die.

Sister has a problem too. She has to figure her basis on the 1/2 she is purchasing. Normally, it would be the amount she paid. Here, it is to her advantage to not have that be the basis because of the gift aspect involved too. Generally, people want all the basis they can get because it reduces capital gain taxes when they sell the property and increases the amount of depreciation one can take if they use the property as a rental. There are rules on how to calculate the basis on a gift, but it is essentially the current FMV or the donor's basis, whichever is lower. So, that is why you should both probably see a tax guy. Maybe split the cost. You may need to complete a gift tax return and sister needs to figure out her basis in the property.

 

[deltadart1]

So what you are saying is what the assessor says means nothing. A year ago a realtor that lives here in town we asked her what she thought the house would be worth and she said she is selling houses with a 2 stall garage(that aren't as nice) in the middle $120,000 range. So the bottom line is we are going to have a realtor(s) put a fmv on the house? Many thanks for your help. I do appreciate it.

 

[tranquility]

So what you are saying is what the assessor says means nothing. A year ago a realtor that lives here in town we asked her what she thought the house would be worth and she said she is selling houses with a 2 stall garage(that aren't as nice) in the middle $120,000 range. So the bottom line is we are going to have a realtor(s) put a fmv on the house? Many thanks for your help. I do appreciate it.

See a tax professional as well as the attorney to transfer. He can advise on the risks and benefits of any choice.

 

[deltadart1]

Our attorney knows the situation so i'm going to trust him that he will give us all the details to get this taken care of.

 

[tranquility]

Fine. Be sure to ask him about the gift tax return and your sister's basis.

 

[deltadart1]

Fine. Be sure to ask him about the gift tax return and your sister's basis.

Will do. I'm writing this all down so I don't forget anything. Thanks.

 

[TrustUser]

i did not read the whole thread.

but zillow usually has all the homes in it. at least every time i have used it, it always comes up with the house.

it certainly does not need to be on the market, for zillow to find it.

as has already been stated, the assessed value may not be at all close to the actual worth. especially if it has been owned a long time.

that being said, zillow is not always all that accurate, either. i use it for a first guestimate. but i would never rely on it alone, for any actual deal i might be contemplating.

if i was in your shoes, i would hire an appraiser to do an "estate appraisal". this is common when someone wants to find out the approximate worth of the house, without paying an arm and a leg for a full-blown appraisal.

or perhaps an even better idea would be to hire a local realtor to give you a bpo (broker price opinion) of your house.

just a couple thoughts, if they have not already been mentioned.

good luck.

 

[deltadart1]

STILL not done! Here it is July 29th and still have 4 more forms to sign. I thought for sure this process would be much simpler than this. I never knew selling my half would take this much time. Next Tuesday is supposed to be the day when all the forms are in the right hands,the check written and my sister will finally be the sole owner of the house. It was supposed to have a closing date of August 1st but like I said 4 more forms to sign. I really hope that's all that needs to be done.

 

[deltadart1]

FINAL REPORT!! Finally closed the transaction today the 8th of August. Sister is sole owner of the house. Thought it would be a simple transaction. It was not. My advice to anyone wanting to do this figure on 2 months total time. I'm glad it will be the only time I will have to do this.