If I Buy a house for my daughter and her husband and then in a few years, sell it to them at a loss to me, are there tax implications?

Forum|Forum|1 year ago
January 5, 2025
2 replies
0 views

No text available

Best answer by Bsch4477

You don’t get to deduct any loss from selling personal property. The difference between the fair market value of the home and the amount you sold it to them for is a gift requiring form 709 but you would probably not owe gift tax in view of the lifetime high gift/estate tax exclusion.

Bsch4477Answer

Employee

Mike9241

the loss won't be deductible by you. if you sell for less than fair value. a gift tax return might be required.

you have not stated whether there's a mortgage. if they maintain the house, pay the mortgage if any and real estate taxes, they may be regarded as equitable owners (for income tax purposes) which would entitle them to deduct the real estate taxes and mortgage interest they pay.

You might want to discuss this with a tax pro since it might be a lot simpler to gift them the cash to buy the house. One downside to what you suggest is that you are the legal owner and probably will need to carry insurance

tennreed1Author

What if we rented it to them for a small amount? Does it then not be considered personal property?

Bsch4477

Employee

Rental of a dwelling unit (for profit):

The tax treatment of rental income and expenses for a dwelling unit that you also use for personal purposes depends on how many days you used the unit for personal purposes.
Renting to relatives may be considered personal use even if they're paying you rent, unless the family member uses the dwelling unit as his or her main home and pays rent equivalent to the fair rental value.
Refer to Publication 527.