I’m in Washington state and buying house at the end of the year but recently a family member offered to sell me their house for roughly $250k but its estimated value is around $400k. The house is too far out of the way to really be an option to just live there otherwise it would be an easy decision. Would it be in my best interest to use my first time home buyer to buy and then sell the house for whatever profit I can to have a larger down payment for another house? I’m open to renting it but also need to move sooner than later with my current timeline.
I don’t know how steep penalties can be by selling basically immediately if there are any.
Do I use first time home buyer perk to buy and then sell a house for higher down payment on house I want?
byu/BaDizza inRealEstate
Posted by BaDizza
6 Comments
So you want to know if buying a house and immediately selling it is profitable?
Sounds like you’re asking if you should say yes to $150k free money.
What do you think?
I sincerely doubt your family members offer to sell you a house substantially below market value is intended to be a way for you to pocket a pile of cash for their equity
just remember certain first time home buyer perks have rules (staying a certain amount of time or you’ll have to pay back the grants) but that’s still a huge profit
Since this is your family member offering to sell you a house on the cheap, they might be a little hurt if you immediately sold it for a massive profit. Without knowing more context, it sounds like they’re trying to help you onto the housing ladder/give you a place to live. Be aware this could be taken poorly by them if you were to flip it quickly.
What are the requirements of the first time buyer program you are considering? It may require you to live there for a period of time (often several years). These programs are state or local level so we can’t speculate about the terms.
That aside, you will have capital gains on a property you sell for $150k more than you paid unless you live there at least two years (see https://www.irs.gov/taxtopics/tc701, don’t take my word for it).
By the way, FHA mortgages are NOT a first time buyer program. They are for almost any owner occupant buyer.