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Could my mother sell me her house for a dollar? How hard/easy is it?

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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 03:42 PM
Original message
Could my mother sell me her house for a dollar? How hard/easy is it?
I have some knowledge of the real estate field...so far, LOL, just enough to know that there are plenty of deeds showing purchases of $100, $1, etc. between family members. Just curious if you have to go through another closing, inspection, etc. and if it has to be a special circumstance (i.e., death/someone going into a nursing home...)

Can anyone give me any quick guidance, or who I'd talk to? I spoke with the county clerk's office, they couldn't tell me much. They just told me she needed a new deed drawn up to transfer the house to my name, and to contact an attorney (which will be done I guess, but seems to me it would be simpler than that?).
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Coyote_Bandit Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 03:50 PM
Response to Original message
1. Talk to an Attorney
Edited on Tue Jun-14-05 03:50 PM by Coyote_Bandit
Laws vary from place to place.

To transfer title basically what you will need is a warranty deed and an exchange of some monetary consideration. However, since the exchange isn't for fair value there may be tax ramifications and you will need to find out about those. And in some situations (i.e., bankruptcy, or a gift made in contemplation of death) an exchange for less than fair value can be set aside.

I would recommend an attorney/CPA for the best advice.

Edit for spelling.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:04 PM
Response to Reply #1
8. I know she didn't think of the tax ramifications, LOL.
And I certainly don't have the money to pay taxes on that...as I said below, everyone's posts are helping me understand why we'd need a lawyer.
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amazona Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:43 PM
Response to Reply #8
21. YOU don't pay gift taxes...SHE pays them
However, unless the fair market value of the equity in the house is more than $200,000 (actually I think it's way higher than that now) then I doubt she has to pay any gift taxes either. However, if she gives any individual a gift worth more than $11,000 in a year (might be up to $12,000 this year) then she has to report the gift on a form.

Doesn't mean she owes taxes on it. Just means she has to fill out a report.

The receiver of a gift doesn't pay the gift tax, though. The giver does. Clearly, receivers don't generally have any money, that's why their friends, parents, and patrons are giving them such generous gifts.


The attorney will know all this.
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dubyaD40web Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 03:50 PM
Response to Original message
2. You might try the title company in your area.
I think you could still sell/buy for a $1 but they have to make a new title, etc.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:06 PM
Response to Reply #2
9. That's a good idea.
May have my mom do that, as when I tell her she should talk to a lawyer, she probably won't believe me! Thanks for the suggestion.
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GumboYaYa Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 03:50 PM
Response to Original message
3. There are lots of questions to be answered.
First, selling a house for $1.00 would be a gift of the fair market value of the home. As a result the seller wold owe gift tax unless the seller elects to use part of their lifetime exemption from estate taxes to apply to such sale. If the seller does not have significant other assets that could be subject to estate tax, that is a possibility.

Additionally, transfers designed to reduce assets for the purpose of medicare/medicaid need calculations are illegal.

With respect to the closing/transfer issues you could do that with a quitclaim deed, but you could potentially lose the protection of any title insurance policy applicable on the property if you quitclaim from the current owner to a new owner. It is extremely important to review the title policy from the purchase or most recent refinancing of the property to see if a subsequent transfer invalidates the policy. If the plicy is invalidated by a subsequent transfer, you need to use a warranty deed to transfer the property and most likely want to purchase a new title insurance policy.

As you can see there are many questions to be answered to give you a dcent analysis. You are best served to get an attorney. My post is not intended as legal advise and I strongly encourage you to consult with a licensed attorney practicing in the state in which you live.

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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:02 PM
Response to Reply #3
7. Yes, of course.
Your post and the others have cleared up *why* it's important to have an attorney look at this. She just wants to make sure it goes in my name in the event of her death. Hers is the only name on the deed, but she is married.

Thanks for the post, I'll suggest my mother speak to an attorney.
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GumboYaYa Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:09 PM
Response to Reply #7
12. Oh that is easy then. You do what is called a beneficiary deed.
Edited on Tue Jun-14-05 04:10 PM by GumboYaYa
Most states allow that. Check with your recorder of deeds.

A beneficiary deed causes the property to pass to the named beneficiary on death and avoids all of the issues I discussed.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:12 PM
Response to Reply #12
15. Oh thank you!
She was thinking it'd be easier to transfer it now, but from what you and others have said, it doesn't seem so.

I think I'm just going to forward her this thread.

Thank you so much for the replies.
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Coyote_Bandit Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:22 PM
Response to Reply #15
18. You should still see a lawyer
In some states a surviving spouse, by statute, takes a certain percentage of the estate. Depending on the size of the estate that might mandate sale of the house and division of the proceeds should your mother predecease her husband.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:26 PM
Response to Reply #18
19. Indeed.
There are a lot of little things/considerations that we didn't think of when she brought this up--so she doesn't get all screwed up, I'm going to tell her that (to talk to a lawyer). Plus, I'll forward the thread.
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flvegan Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 05:00 PM
Response to Reply #12
26. The husband will have to sign the deed as well, I believe
unless there's a non-homestead disclaimer (depending on the state).

Could also do a Life Estate or Joint Tenants w/rights of survivorship.
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Shell Beau Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 03:55 PM
Response to Original message
4. I don't know,
Edited on Tue Jun-14-05 03:55 PM by Shell Beau
but working in and out courthouses doing title work and dealing with deeds and leases, I've seen people do an Act of Donation, or deed for love and consideration, and have seen $1.00 as the price. So just check with the laws of your state. Taxes may be another issue.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:07 PM
Response to Reply #4
10. Yeah, right?
I see deeds all the time for $1. I figured how hard can it be, since they're everywhere? Apparently, though, those people have a lot more money than I do, plus access to an attorney. That's a depressing thought, LOL!
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caty Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 03:57 PM
Response to Original message
5. Talk to an attorney.
If you put your mother's house in your name, and you should happen to get sued, you could loose your mother's house. Find out the pros and cons before you do anything.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:09 PM
Response to Reply #5
13. Yup.
I am not so keen on the idea, the more I'm finding out about it!
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aeolian Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:01 PM
Response to Original message
6. Captial Gains?
I'm not sure, but if you buy a house for $1, then sell it later for $50,000, I'd think you'd get nailed for $49,999 of capital gains.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:08 PM
Response to Reply #6
11. Yes, seems you're right.
For some reason, neither of us thought about the IRS at first. Pretty dumb, because I'm sure the IRS won't forget about us!
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AllegroRondo Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:16 PM
Response to Reply #6
16. Unless you use the proceeds to buy another house
within a certain time limit (a year?)
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notadmblnd Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:11 PM
Response to Original message
14. I think it's a matter of her signing a quit claims deed
thats what my mom did for me.
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tjdee Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:17 PM
Response to Reply #14
17. Did you get stuck with all the capital gains taxes?
That seems to be one of many concerns...?
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notadmblnd Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:45 PM
Response to Reply #17
22. No, I still have the house
I don't think that is something I would have to do until then, but I'll die in this house and then it goes to my son. After my husband died I put all my assets in a revocable trust so when I do die..nothing will have to go through probate and it will all be my only childs.
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amazona Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:39 PM
Response to Original message
20. get an attorney but she can't die for 3 years!
Actually with the new estate tax law she may be able to die when she likes but in days gone by, and it doesn't seem all that long ago, if you transferred property like this at below fair market value then the person giving you the gift of the property -- and it is a gift, if you're selling below fair market value -- then had to somehow hang on and not die for 3 years or there would be all kinds of taxes to pay anyway. Couldn't get Medicaid for 3 years either. So if the intent is to avoid taxes or to get Medicaid without losing everything, it might not work without some expert legal footwork. Older people were over-using this to transfer property to the next generation and collect on Medicaid you see without dipping into their estate.

Get an attorney. They'll know.
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xmas74 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:46 PM
Response to Original message
23. I know that in MO we used to be able to sell each other
cars for $1 but that was changed a number of years ago (state wanted their tax money). Now we will do it for $100.
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smitty Donating Member (580 posts) Send PM | Profile | Ignore Tue Jun-14-05 04:51 PM
Response to Original message
24. Seek legal advice
before you do anything. The rules vary from state to state and there are legal and financial ramifications. For instance, if there are any mortgages, liens, or unpaid property taxes, they'll survive and follow the transfer from your mother to you.
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flvegan Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-14-05 04:58 PM
Response to Original message
25. $10 and other lawful consideration.
This is common here (Florida) so as to pay minimal doc stamps.

She could simply execute a Quit Claim Deed giving you her interest in the property without any guarantee of title or marketability of same.

I don't know what state you live in, but here, there's no need for a closing, inspection, etc. Additionally, the tax issue...well, isn't (again, in Florida). If you're that worried about it, she could retain a Life Estate in the property, or she could deed it to you AND herself as Joint Tenants with rights of survivorship.

Without addtl. knowledge, you could seek counsel, but your local Title Company can help (though they probably will put a disclaimer on your deed stating that it was prepared without benefit of an exam).
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