OT...buying grandmothers house...

Jambruins · Nov 15, 2007

My wife's grandmother wants to sell her house. We live right next door to her and have a small house. My wife's grandmother asked us if we would consider buying her house and her buying our house. I was thinking that instead of us taking out a mortgage to buy her house could we do something like buy her house for $1 (and she buys ours for $1) and then just pay her a monthly payment. This would basically eliminate paying interest on a mortgage. Can you do this with houses? If you can do this are there any negative things for her or us? Thanks.

WVU · Nov 15, 2007

so neither of you owe anything on your houses? I am not sure if this is legal or not, but I would assume it isn't.

ChalksR4Kids · Nov 15, 2007

Like kind real estate exchanges can have extremely favorable tax advantages. Yes, they can be done. Whether or not it will work in this case, I can't say, but it is definitely worth looking into. Your next step is to see a good accountant.

MIKEY.1TIME · Nov 15, 2007

look into " gifting' each other your houses. if you sell the houses for a dollar, and you ever want to sell the house again, your capital gains will be huge

fhmesq44 · Nov 15, 2007

ChalksR4Kids said:
Like kind real estate exchanges can have extremely favorable tax advantages. Yes, they can be done. Whether or not it will work in this case, I can't say, but it is definitely worth looking into. Your next step is to see a good accountant.

If they are personal residences there is no like kind exchange (or need for one).

What is the debt/equity on each property? What state are you in? How are property taxes calculated?

joeyfitzclick · Nov 15, 2007

ChalksR4Kids said:
Like kind real estate exchanges can have extremely favorable tax advantages. Yes, they can be done. Whether or not it will work in this case, I can't say, but it is definitely worth looking into. Your next step is to see a good accountant.

Like kind exchanges are for investment properties only, not owner occupied residences.

I believe in most states barter, or property swaps are capital gains exempt, however a value must be put on the properties involved.