Tax question with selling a house

[Caryn Fischer]

Hello all. Can someone explain the details of selling a house to a child?

Is there a limit on pricing?

Does it have to be sold at fair market value?

Are there limits to the “look back” for primary home exemption?

Thank you!

[Jaron Walling]

@Caryn Fischer  The downside of gifting or selling property to your children is that it can have capital gains tax consequences. If your children decide to sell it (you can't predict the future), they will likely face steep capital gains tax. 

When transferring real estate as a gift, it does not receive a step-up basis, as it does when it has been inherited. It's a big reason to think about estate planning, trusts, or just selling the house on your own. If you sell your property, the tax basis (original cost) of the property for the giver becomes the tax basis for the recipient. It's no where near as beneficial for your children. 

I would strongly advice consulting with an attorney or financial planner to discuss your options. This could be tied to your will. If you have considerable equity in the property or multiple properties it's even more important. There are numerous professionals in these forums.