Legal Question in Real Estate Law in California
buying parents home
My husband and I have been renting a home owned by my parents for 8 years and we would like to buy it from them with them financing the mortgage for us. Can we do a quick claim deed? Do they have to pay their capital gains tax all at once or is it broken up like the mortgage payments?
1 Answer from Attorneys
Re: buying parents home
Your parents could transfer the property to you via Quit Claim, but that deed is typically not used in a sale transaction. A Deed of Trust would provide them security should you default.
Regarding the tax issue, remember first that your parents are entitled to the first $500K of capital gains tax free ifthey have lived in and owned home for two of the last 5 years.
As far as spreading out the gains over time, here is a good article to check out. . . http://www.circlelending.com/presskit/la_times_sunday_5_21_06.pdf.
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