Retirement tax questions


@Anonymous_ wrote:

@Opus 17 wrote:

Is she going to legitimately sell to a family member for full price?  That's fine.  Then the family member sells the house, and might have a small gain or small loss. 


That could very well present an issue if the "family member" turns around and sells the house shortly after the "sale".

 

The step transaction doctrine could come into play. The IRS could consider it to be a fraudulent transaction designed only for the purposes of tax avoidance. Not good.


Well, I said "full price", which I think avoids your concern, but I agree with your overall point.  If the mother sells the home to a family member for less than full price (let's say $800,000) and the family member flips it for full price ($850,000), that sounds like tax avoidance by the mother.  (Although the family member will owe tax and won't be able to exclude it.)