Legal Question in Real Estate Law in Indiana
Transfer land as a gift
I would like to build a house on some land which my parents currently own. Legally, can I purchase this land from them for a very small amount (say $1) or do they need to somehow deed it to me. Is there a better alternative and what are the tax implications?
1 Answer from Attorneys
Re: Transfer land as a gift
If they gift it to you by means of a quitclaim deed, you take the land with the same basis that they have (their purchase price) which would affect you if you sold the property later if the IRS has any capital gains for your personal residence in effect. If they sell it to you for less than the current market value, it would be treated as a gift but your basis might be treated as the price you pay - which would impact your capital gains if, again the IRS taxes it. Generally if your parents sell off part of their residential land, they would report the gain, but could not report the loss for selling it for less than it cost them.
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