Can You Sell Your Home to a Family Member?
Yes you can sell your home to a family member.
You can do it yourself or hire an agent to do all of the dirty work like contracts and all of the other necessities.
Selling to a family member does have its complications though. Here’s what you need to know:
Arm’s length transaction
An arm’s length transaction is when two parties, who don’t know one another, come to the purchase agreement free and independent of each other.
When you’re related to someone, the IRS does not deem the sales process as an arm’s length transaction.
Fair market value defined by the IRS: “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”
Let’s say you and your family member come to an agreement on a price for the home that’s lower than fair market value. You would potentially have to report this to the IRS as a gift to the buyer.
