Selling your house directly to a family member is 100% legal, and you can set the sale price at whatever you want. A few things to know:
- Sell at fair market value, and it's an ordinary transaction that's relatively straightforward (although you'll still need a realtor and/or an attorney's help).
- Sell for $200,000 below market value, and the IRS treats the discount as a gift. You probably won't owe anything on the $200,000, because the 2026 lifetime exemption is $15 million. But it must be reported on Form 709, and your buyer takes over your original cost basis instead of getting a fresh one at the price they paid.
Example: You bought the house for $100,000. It's worth $500,000 today. You sell it to your son for $300,000. His cost basis is the $300,000 he paid, not the $500,000 the house is worth. If he sells for $500,000 later, he's taxed on a $200,000 gain, before any primary residence exclusion. A buyer who'd paid full market value would have owed nothing.[1]
» Selling to a relative and not sure how to price it? A local agent can run a free comparative market analysis, which is the document that proves fair market value if the IRS ever asks. Get matched with a local agent today.
Can you sell a house to a family member?
Key takeaways
- You can sell at any price, but the discount counts as a gift. Sell a $500,000 home for $300,000, and the IRS treats $200,000 as a gift from you to the buyer.
- You almost certainly won't owe gift tax. The lifetime exemption rose to $15 million for 2026, up from $13.99 million, under Public Law 119-21.[2] You still have to file Form 709 for the amount above the annual exclusion. [3]
- Your buyer's basis is the greater of what they paid or your basis. Sell at a discount, and they take the discounted price, so the gap between that and market value becomes their taxable gain when they sell. Gift the house outright or sell for $1 and they inherit your original basis instead, which is usually much lower.[4]
- Gifting and inheriting are taxed very differently. Inherited property is stepped up to fair market value at the date of death. Gifted property is not.[4]
- You can't write off a loss on a sale to a relative. IRC Section 267 disallows it, even when the loss is real.[5]
- Selling to your spouse or child usually won't trigger your mortgage. Federal law blocks lenders from enforcing a due-on-sale clause when a spouse or child becomes an owner of a home with fewer than five units.[6] Siblings, grandchildren, and in-laws get no such protection. The exemption also doesn't release you from the note, so you stay liable for the payments.
- Get a CMA report before you agree on a number. A CMA is free from a local agent and it's your evidence of fair market value.
What are the IRS rules for selling a house to family?
Every rule here comes down to price.
When you sell to a stranger, you're both pushing for the best deal possible. This tug-of-war is what makes the final price the fair market value, and the IRS calls it an arm's-length transaction. Sell to your daughter, and you're likely not fighting on the price. That's a non-arm's-length transaction, and it's why the IRS won't take your sale price at face value.
The IRS also defines a gift pretty broadly: "Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return."[7]
So if you give your daughter a break on the price, you didn't get full consideration. You made a gift, whether you called it one or not.
How the IRS treats your sale price
| What you do | How the IRS views it | What you report |
| Sell at market value | Ordinary sale | Nothing extra |
| Sell below market value | Part sale, part gift | The gift equals market value minus your sale price. File Form 709 if it tops $19,000 per recipient |
| Gift it outright, or for $1 | Gift of nearly the whole value | File Form 709 |
| Sell at a loss | Loss disallowed | No deduction |
Who pays the gift tax? First, the donor pays the gift tax, not the recipient.[7] Sell your son the house at a $200,000 discount, and the reporting is yours, not his. His bill comes later, as capital gains.
Second, you can't claim a loss if you have one. Buy at $400,000, sell to your brother at $350,000, and that $50,000 loss is disallowed under IRC Section 267. [5] The rule applies to parents, children, and siblings, even if the loss was real.
How to document prices for the IRS
Form 709 is due April 15 of the year after the gift.[8] The IRS adequate disclosure standard requires you to attach either a qualified appraisal or "a detailed description of the method used to determine the fair market value of the gift."[8] A free comparative market analysis from a local agent meets that second requirement.
Order the CMA before you set the price. A CMA run after closing just restates the number you already picked.
When you call an agent, ask: "I'm selling this home to my daughter below market value, and I need documentation of fair market value for a gift tax return. Can you run a CMA and write up the comps?"
Keep the CMA, the signed purchase contract, and the settlement statement in one file. If the IRS questions the price six years from now, that's what you'll be asked for.
» LEARN: How to avoid capital gains tax on a house
Can you sell a house to a family member for $1?
Yes, but gifting the house outright is usually the better approach.
Sell a $400,000 house for a dollar, and you've given away $399,999 of value. The IRS sees it exactly that way. Knock off the $19,000 annual exclusion, and you're putting $380,999 on a Form 709.[2]
That dollar doesn't do much for your buyer, either. Their cost basis is whatever you paid for the house, not the dollar they handed you.[4] Buy the place for $100,000, and that's the number they're stuck with, so selling at $400,000 later leaves them with a $300,000 gain.
A couple of things can bite you here. If there's still a mortgage on the house, states like Florida and Washington treat the loan balance as consideration, so even a $1 deed can leave you with a transfer tax bill. And while your lender can't call the loan when you're transferring to a spouse or child, it can if you're handing the house to a sibling, a grandchild, or an in-law.[6]
So if you just want your kid to have the house, gift it and file the return. You end up in the same place, tax-wise, without anyone later wondering whether it was really a sale.
How much does it cost to transfer a deed to a family member?
| Cost | What it runs | Who sets it |
| County recording fee | ~$100; Flat in some counties, per page in others. | Your county recorder |
| Real estate transfer tax | $0 to several thousand, depending on your state and your relationship to the buyer. | State, county, and city |
| Real estate attorney | $500 to $2,000 for a straightforward sale, or $150 to $600 per hour. | The attorney |
| Owner's title insurance | Priced off the home's value | Title company |
Many states don't tax family transfers at all
Pennsylvania charges a 1% state realty transfer tax, plus local tax in most municipalities.[9] Transfers between family members are excluded from it, and the list of qualifying relationships is broad: spouses, parents and children, grandparents and grandchildren, siblings, a parent and a child's spouse, and an individual and their sibling's spouse.[10]
Washington takes a different route. Its real estate excise tax is calculated on consideration, meaning money or anything of value paid for the property. A true gift involves no consideration, so it's exempt once you file a REET Supplemental Statement.[11]
Call your county recorder before you assume you owe anything. Ask whether your state excludes transfers between your specific relationship, and what form proves it.
Can you sell to family without a realtor?
Yes, and it's the most common reason people skip an agent. Finding a buyer is the biggest thing an agent does, and you already have one.
The cheapest way to sell a house to a family member is a private sale with no agent on either side. Four costs stay on the table either way:
| Cost | Why it doesn't go away |
| Closing | An attorney or title company still has to handle the deed, payoff, and settlement statement |
| Recording fee and transfer tax | Set by your county and state, not by whether an agent is involved |
| A defensible valuation | You need proof of fair market value for Form 709 if you sell below market |
| Title work | Your existing owner's policy doesn't transfer to the new owner |
Ask for a reduced rate
An agent who doesn't have to find a buyer, market the home, or host showings is doing a fraction of the usual work. Say so when you call.
Ask: "I already have my buyer. This is a family sale and we've agreed on a price. What would you charge to run the CMA, write the contract, and coordinate closing?"
Clever's partner agents charge a 1.5% listing fee to begin with, and many will go lower on a sale where the buyer is already lined up. Compare agents in your area.
How to sell to family, step-by-step
1. Agree on a price and document it
Get a CMA from a local agent before you settle on a number, not after. If you're selling below market value, that document is what supports the figure you put on Form 709.
2. Decide how your buyer pays
Cash is the simplest. If they're financing, tell the lender up front that this is a non-arm's-length sale, because lenders apply different rules and may require a full appraisal. If you have an FHA, VA, or USDA loan, ask your servicer whether the buyer can assume it, which lets them take over your rate without new origination fees.
3. Put the agreement in writing
Use a real purchase agreement with the price, closing date, who pays which costs, and what's included. Handshake deals between relatives are the ones that end up in court.
4. Pick the deed and close
A quitclaim is the cheapest option and fine between relatives who know the title history. A lender financing your buyer will usually want a general warranty deed. Record it with your county and pay any applicable transfer tax.
5. File Form 709 if you sold below market
Due April 15 of the year after the sale.[8] Attach your CMA or appraisal. You'll almost certainly owe nothing against a $15 million lifetime exemption, but the return still has to be filed. [2]
FAQ
Is it illegal to sell your house to a family member?
No. Selling to a relative is legal in every state, at any price you agree on. What's illegal is misrepresenting the transaction to avoid tax, which means reporting a sale price that isn't the real one, hiding seller financing terms, or failing to file a gift tax return when the discount requires it.
Can I sell my house to my spouse?
You can, and there's generally no tax on it. Transfers between spouses don't trigger recognized gain or loss under IRC Section 1041, and your spouse takes your basis in the property. [12]
The gift tax marital deduction covers transfers to a spouse as well. The mortgage is the part to check, since a transfer between spouses is protected from a due-on-sale clause but doesn't remove either of you from the note. [6]
Can my parents sell me their house below market value?
Yes. Your cost basis is the greater of what you paid or your parents' basis. Pay $300,000 for a house they bought for $100,000 and your basis is $300,000, not $100,000. The discount counts as a gift from them to you, and they file Form 709 if it exceeds $19,000 per parent per child.[2] Two parents selling to you and your spouse can move $76,000 of value in one year before anything gets reported.[4]
What are the risks of selling a house to family?
The three that cost real money are an unfiled gift tax return, a buyer who inherits a low cost basis and gets a large capital gains bill years later, and a transfer tax triggered by an assumed mortgage on what everyone thought was a free gift. The risk people worry about most, a lender calling the loan, doesn't apply to transfers to a spouse or child on a home with fewer than five units. [6]
