Buying house from parents on owner financing.

[Brian Knox]

Hi guys,

Over the past two years, I've helped my parents (age 70) buy two rental houses for investment. I did not help them financially - just with finding the deals, running numbers, and stuff.

Now, I have approached my parents about selling me each of the houses via owner financing (so that I can avoid 20% down payments because I just don't have the cash).

Are there limits as to how good of a deal they can give me on the purchase price? In other words, are they allowed to sell well below market value or does Uncle Sam catch on to that?

In my limited reading, it appears that there are some limits on this so that people don't skirt the gift tax, but I am sincerely looking for some insight.

Much appreciated!

Brian in Mauldin SC