Fair price sell house to daughter?

[3Hotdogs]

So..... Three daughters to share assets upon our demise. Daughter in question lives on second floor with her family. It is a 2 family house. We live on the first floor. Other daughters have their own houses.

Plan is to sell the house to her, while retaining life estates for ourselves. Her and husband would get full control of house when we die or go into assisted living.

House appraises at 600k. She would share in remaining assets when we die.

Is $400k a fair sale price? More or less?

[sfstaxprep]

1. Anything More Than 20% Below Appraisal Is Risky

I'd keep it under a 20% reduction, otherwise you run the risk of the IRS deciding it was an illegitimate Related Party transaction.

[mitch96]

3. How about going on Zillow or Realtor.com and see other comparable homes..Look and see

which homes sold for the least amount. Thats what the appraiser will do. Check Comp's
I see some homes that sell for $10 with a quick claim deed and I would assume they are family to family sales... Also check with a real estate lawyer. YMMV
m

[sfstaxprep]

6. Zillow & Realtor.Com Are Famously Unreliable At Times

An actual Appraisal is the safest route. Get more than one, or find someone who would give a lowball figure. It's the opposite of the usual, since people normally are looking for the highest appraisal possible when selling.

[mitch96]

7. Unreliable, yes and they have a section where you can see "sold home" and get those prices.

When I sold my home they were about 5k off. In some regions you can actually click a link and see the county tax assessors web site for that property. Broward County in So Fla is one. You can see what the home sold for over the years and taxes paid. YMMV
m

[msongs]

2. sell it at the fair market price. it will go up in value for them over time nt

[sfstaxprep]

4. Don't Forget About The Annual Gift Allowance

You are able to gift $15K/Year to any individual. If you are married, you can Each gift $15K. If you are married, and the person you are giving to is also married, then you can give $15K Times 4, each year.

If you want to make it easier on her, do it that way.

[FBaggins]

5. Not enough info

Your age (and that of your spouse) go into a calculation for what the value of the life estate is. Something close to appraisal minus that and minus the saved real estate commission is in the ballpark

You should contact a professional if there’s any chance that one of you will go on Medicaid at some point. It’s also a good idea for the conversion to be open with the other children to avoid potential hurt feeling later.

[LakeArenal]

8. Two of my spouse's siblings bought the family cabin for fair market value

At that time it was $42000. By the time both parents died it was worth much more.
However, their cash inheritance was minus $42000.

Five other siblings were fine with that and can still use the cabin anytime we want.

[turtleblossom]

9. Daughter stays upstairs, rent out downstairs...

Rent money split between the other two daughters.
Don't forget to get life insurance if you haven't already.

[Cicada]

10. You can decide what's fair

And there is no requirement that you be fair. If this were an exchange among unrelated parties the value of your retained life estate would depend on your life expectancies. How much would you pay for the upstairs? For the downstairs? After that valuation you can ca,curate the lesser value of downstairs limited to use for your joint lifetime.