Legal Question in Real Estate Law in Wisconsin
sale of property to son on a land contract
If I sell my lake property to my son and take a contract for payment on the sale price, what value do I place on the sale and is this a capital gain? I have owned the property 7 years. If capital gain do I report the gain as i receive payment in the years I am being paid. What interest rate do I have to charge him?
1 Answer from Attorneys
Re: sale of property to son on a land contract
What you describe may be part sale and part gift, if you do not sell to your son at fair market value. If any part of it is a gift, gift tax returns may have to be filed. Your sale may qualify for capital gain treatment. If you do the sale over time, you may also qualify for installment tax reporting, reporting just the gain on the principal received in any one year. The IRS does impute interest if a below market rate is used.
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