Is it illegal to sell my home to a family member?

No. It is 100% legal to sell your house to family as long as you follow the correct rules and regulations, along with providing any necessary documentation for the home sale process.

Can my parents sell me their house below market value?

It may have been a lifelong dream to 'purchase' your parents’ home at a very favorable price and raise your family where you grew up. However, the IRS has strict rules about the transfer of real estate among family members. That’s because below-fair-market-value property sales were once a common way to avoid the gift and inheritance tax. In response, the IRS started taking a closer look at these sales to spot fraudulent or 'sweetheart' deals. If you’re borrowing from a mortgage lender to complete the purchase, they’ll require you to prove the home’s value. They’ll also require a gift letter for gifts of equity.

Is it worth it to sell a house to a family member?

There are a lot of potential benefits to buying a home from a friend or relative, but mixing home sales and family can be a sticky business. The same goes for selling a house to a family member. If you sell your home to someone you trust, it might make all the difference. The drawbacks can include the following: You could not make as much as you would have if you put the home on the market. You might be skipping steps in the process because 'it's family.' There could be misunderstandings regarding your home's fair market value. You’ll have to be careful not to fumble with gift tax laws (including raising red flags with the IRS) and other issues that don’t apply when selling to a stranger. Prior to making the decision to sell to a family member, both parties should weigh the pros and cons before moving forward with the home sale.

Selling A House To A Family Member: A Guide