Reply to Advice Needed - Buying Someone Out

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[quote=Anonymous][quote=Anonymous]Okay I just reread your original post.

You need to figure out what is half of what the parents put into the house, since that is what they feel she deserves to get. Then you need to offer her that amount in exchange for getting her off the title and you on the title.

I am not a real estate attorney so there may be something wrong with this analysis, but that seems like a good thing to do. You need to consult specialists.[/quote]

Well, no. The house needs to be appraised and she and her financee need to buy her out for 1/2 of the current value.

Unless the parents want to be repaid, in which case, 70% of the value is paid to the parents since that's their equity stake now. The brother and sister own the other 30% and brother and intended would have to buy out 50% of that. Either way, brother and financee will have to finance about 85% of the house value in order to own it, unless the parents gift their 70%, in which case the 85% reduces to to 50%.

Either way, a gift tax return will likely have to be filed with the IRS by the parents. Unless this house isn't worth much. Even a gift of 30% is likely to exceed annual tax-free limits. And the parents will, in fact, owe capital gains tax on the 70%.[/quote]

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