The Atlanta Journal-Constitution

Give your relative a sweetheart deal, but write it down

- Sun Sentinel (Fort Lauderdale, Fla.) By Gary M. Singer Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. Contact him at www.sunsentine­l. com/askpro or follow him on Twitter: @GarySinger­Law.

Q: What do we need to consider if we sell our home to a close relative? Specifical­ly, are there any tax ramificati­ons or other potential issues if we want to help our family member by selling for significan­tly below market value? — Anonymous

A: You can sell your prop- erty at a discount and offer favorable terms, but get all that in a written contract.

I have seen this favor turn sour many times. The problem most often occurs when the parties involved don’t treat this as a standard busi- ness transactio­n.

People often seem reluctant to use a written con- tract when dealing with close friends or relatives, but the truth is that a detailed writ- ten derstandin­gs contract avoids that lead misun- to disputes and hurt feelings.

A favorite saying of mine is,

“If you can say it, you can sign it.”

Another frequent mistake I often see is not getting title insurance for this kind of transactio­n. The own- ers usually say they’ve had the house all these years and there’s nothing to worry about. But if something does pop up, the buyers may not find out about it until years later when they go to sell the house — and it may be too late to resolve what may have been a simple issue. This type of transactio­n most likely will be incometax-neutral for both you and your relative. However, everyone’s tax situation is different, so you shouldn’t ever make any large transactio­n without consulting a tax profession­al. Also, your relative should understand that the transfer will cause the property taxes to be reassessed to market value, so he or she can’t count you may on any have discounts had. Finally, that if you, as the seller, intend to hold the mortgage for the buyer, there are certain lending laws that still need to be followed.

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