Sale of houses to related parties

[LSmith33]

My client owns three houses, one is his personal residence and the other two were purchased for his kids to live in. He took out a mortgage against his personal residence of $200k to buy the third house in 2007.

To pay the mortgage off, he would like to sell the 2nd & 3rd houses to each kid for $100k each. If he did that would any gain (no loss because of related party) be figured on the price of $100k and then the difference between sale price and FMV considered a gift or does that not even come into play?

One of houses was purchased in 2000 for $60k (FMV per client $250k), the other was purchased in 2007 for $220k (FMV per client $350k), plus he's done a lot of improvements on that house.

Help?

Thanks,

~Laura Smith, EA

[michaelmars]

personally i tell clients with questions like that, "unless its urgent, can you give me a ring after 4/15 when we can discuss it lesurely?, i'll even let you buy me lunch while we talk about it" then i get onto another return!

[LSmith33]

personally i tell clients with questions like that, "unless its urgent, can you give me a ring after 4/15 when we can discuss it lesurely?, i'll even let you buy me lunch while we talk about it" then i get onto another return!

Thanks for your input.