Options buying investment property off of a relative.

[Michael Couto]

Hi All,

It's been a while since I've been on this forum, although I am out there making moves! I have a situation where I can buy a property off of an aunt for a really good price. I want to see what options are out there to avoid her getting slammed with taxes. It is a multi family property that she uses as investment only. I would be buying it as such and don't plan on living there. She's held it for a long time and has basically fully depreciated it's cost. Sorry if some of the things I'm saying aren't completely accurate, still learning!

Here's some details:

Property Value: $280,000

Current Mortgage: $100,000

What I would buy for: $180,000

Options:

1: Sell outright. I think, even though I'm getting a deal, she would get taxed on capital gains for the market value of the property?

2. Gift. Same thing, she would get taxed on anything over the $14k annual gift limit.

3. A thought, can she 1031 the property for a better property and then put the new property in my name deferring taxes? Guessing this is a no because it will all have to occur under same name/tax id for the 1031 to be valid.

4. Is there a way to do this deal with seller financing? If so, could you give me an example?  She would probably be willing to pay off the mortgage balance and hold the whole $180,000 note for me. Is there a way to pair this where the $14k annual gift to alleviate some taxes?

All just thoughts, any input would be greatly appreciated!