From Yahoo Finance: 2025-05-27 12:34:00

A reader asks if buying a house from their mother at fair market value is a good tax strategy. If the mother gifts the house, the child will assume her tax basis, potentially leading to higher capital gains tax. An alternative is for the mother to sell the house and hold a note for the balance. Forgiving the note later would establish the cost basis at fair market value. Under U.S. tax code, the cost basis of inherited property would be the fair market value at the date of death. Proceed with care to avoid complicated family situations.



Read more at Yahoo Finance: ‘Is this a good tax strategy or a sham transaction?’ My mother wants to give me her home. I have a plan to avoid taxes.