Hello,
I am a landlord that usually invests in apartment buildings. Someone that has done some work on my properties in the past was going to lose the house he was renting because the landlord was going to sell. They landlord had initially agreed to sell him the house but changed his mind. I ended up purchasing the house and renting to the existing tenant with the agreement that I would sell it back to the tenant at a later time.
It has been a few years and it looks like the tenant is ready to purchase the house from me. I paid around $250,000 for the house. I will sell it for $260,000 per my verbal agreement with the tenant when I purchased the house. I think the house may appraise for around $400,000.
I am wondering if I will be subject to gift tax in this situation. It seems that I definitely would if this was a family member or close friend but I would consider this tenant more of an off and on business associate. They were never employed by me, just a handyman I would hire from time to time.
What do people think? I am going to check with an accountant/tax advisor but thought I would check here first.
Thanks.
