Short sale from my mother

[Alyshan T.]

My mother-in-law can no longer afford the mortgage on her existing home and my husband has suggested we move into her home. She said she is willing to sell it to us for remaining payoff amount. We figured if we purchase her home we can have access to the equity which will help to update the home and new real estate ventures. My question is, can she sell us the house for the payoff amount even though it's worth more then what she owes? Are there any pitfalls we may run into with doing this?

[Christopher Phillips]

Alyshan T.

You can purchase the house at the payoff amount assuming you qualify for a loan. However, there will tax consequences for the gifted equity and your mother in law could have to pay gift tax.

So, you would need to have her speak to an accountant to make sure it's done the best way.