Tax Strategy: Gifted or Purchased
Hey All! I wanted to get your opinion on a real estate situation.
My mom bought a house years ago for about $105k (owned outright). In 2020, we had a verbal agreement that she'd sell it to me on a land contract for $130k, and I gave her a $10k down payment. At the time, the house was worth around $160k, so we were both comfortable with the price.
Over the next few years, the market took off and now the house is worth around $215k. Since the value increased so much, I told her I'd pay her a little extra, bringing the total purchase price to $150k. After my down payment, I'd still owe her about $140k.
Now we're trying to figure out the smartest way to transfer the property. Does it make more sense for her to gift it to me, sell it to me, or use some other strategy? I'm trying to think through the tax implications, property taxes, depreciation, capital gains, and long-term wealth-building.
I would be keeping this home as a long term rental!
Thank you for responses!