Selling an Investment Property to Family

[Cody Cuvillier]

Hey Bigger Pockets Community,

I bought a quadplex in 2018 as an investment property. I bought the property off-market and was able to buy it for $192,000 with 25% down using a conventional loan. My father recently sold his house and my plan was to sell him the quadplex for what I paid. He would use the property as a retirement house hack. 

The property is worth around $265,000 now, which is great for me. However, the way I understand the tax code is that if I sell my father the property for $192,000, then I am essentially gifting him $73,000 of equity. He cannot afford to pay taxes on this amount. I am trying to figure out the best way to sell him the property without incurring a massive tax penalty. We would like the property to be in his name, so he can have all the tax benefits of being a homeowner.

We are also open to adding him to the current deed, so we become joint tenants. Then, we can essentially become partners on the property, even though he will be living on the property and receiving all tax benefits. I am not sure it the mortgage company will have issue with this.

Any advice will help. My next step is contacting a real estate attorney, but I was hoping to save the money with some great Bigger Pockets insights.

Thanks,

Cody Cuvillier