My 18-year-old son inherited his grandmother's house. His father wants to buy it from him for $1. Wouldn't my son have to pay capital gains tax? The house is in Pennsylvania

  • 10
    How would it be in your son's best interests to give away his inheritance like this? Assuming dad's good intentions (?), there is surely a better way of achieving whatever he's trying to do.
    – brhans
    Oct 31, 2017 at 16:45
  • 3
    Apart from the taxes, it's likely to wreck your father's relationship with his son, if he forces him to give away a house that would presumably help keep him financially secure for life. Your husband should consider that before attempting to force the issue. Oct 31, 2017 at 16:45
  • 1
    @DStanley she(?) seems to mean that the father wants "him" the son to sell it to "him" the father for $1.
    – RonJohn
    Oct 31, 2017 at 16:45
  • 8
    From the little you've told us, this sounds a whole lot like the father is trying to scam the house from his son. More details would help.
    – RonJohn
    Oct 31, 2017 at 16:48
  • 2
    @Grade'Eh'Bacon just because a man is the father of this woman's son, you can't assume that she is married to him. :/ Oct 31, 2017 at 16:59

1 Answer 1


Inherited real estate is purchased at a "stepped up" basis. That is for tax purposes the house price is the value at the time of death. So grandma might have bought the house for $20, and the time of her death, if it is worth 550K the basis price is 550k for your son.

If your son sells the house for $1, then that advantage will be lost. There could be a tax liability created when there does not have to be one. The father when he goes to sell the house could have to pay taxes on the difference between $1 and the current value. A pretty dumb move.

A better option would be for your son to rent the home to his father. He could do so for the carrying cost: taxes, and insurance and that should be acceptable by all.

  • Why would the son owe taxes on the sale? He got the stepped up basis.
    – zeta-band
    Oct 31, 2017 at 18:18
  • Say what? He inherited the house, basis stepped up. If he sells it for less than that value, how does he owe any tax? Oct 31, 2017 at 18:19
  • 5
    Selling a house for $1 is a gift to the purchaser, and gifts can be taxable to the giver.
    – Shawaron
    Oct 31, 2017 at 18:32
  • 1
    Yes. Your answer feels right. But basis usually follows a gift. Seems strange a dollar transaction would both make this a gift, subject to potential gift tax to giver, as well as a dollar basis. Either way, it seems a potential mess. Nov 1, 2017 at 15:43

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .