Selling a home in Newport Beach or anywhere in Orange County, California for that matter, you want to make sure you aren't opening up a gift tax issue when selling to a family member. Gift Tax laws with the Federal Government are pretty straight forward. If a related party buys your house and does the purchase just like normal no gift tax liability will be created. However if you (as the seller) gift them some equity you have to be aware of the limitations. A single person can give a gift to anyone for up to $13,000 per year and a married couple up to $26,000 per year. Once you go over this threshold you need to file a gift tax with the IRS and right now the limit is up to $5,000,000 over your lifetime. Remember this doesn't include the additional $13,000 or $26,000 that can be given annually. So if you are gifting equity in your home above either of those numbers you will need to let the IRS know and it will go towards your lifetime gift allowance before the gift tax begins.
For more information on gift tax and how it affects the real estate transaction please contact one of our Newport Beach or Orange County realtors today!