We make selling a home to a family member safe, easy, and successful.
Why use National Family Mortgage? There are plenty of reasons!
Prevent IRS scrutiny. The current IRS annual gift tax exclusion is $15K per person. If you simply transfer the deed to your home to a relative, the IRS may treat the fair-market value of the property as a taxable gift. In order to prove the exchange of value is not a taxable gift, but a legitimate loan, you must properly document your offer of “Seller Financing” and also report earning interest on the loan at a rate equal to or above the minimum rate required by the federal government, called the Applicable Federal Rate (AFR). Even if you document the loan, but report earning less than the appropriate AFR, the IRS may impute the interest as income and also view the forgone interest as a taxable gift.
National Family Mortgage ® coordinates the government registration of your loan with your closing attorney, title company, or escrow company that will generate the new deed. This will allow your Borrower to legally deduct their mortgage interest payments to you from their federal tax return – just like with a bank mortgage.
Proper documentation sets clear expectations and prevents future misunderstandings. If anything happens to you, your registered mortgage documentation also protects the interests of your other children or family members who could be affected by the proper accounting of the loan. Our optional loan servicing platform reduces awkward conversations, provides year-end tax statements for the IRS, and keeps everything business-like.
A Strong Investment Vehicle
What are your bonds or CDs paying these days? Selling a home to a family member can earn a solid return and spread out the capital gains tax from the sale of your home. The emotional returns are strong, too.
Monthly Income Stream
Your National Family Mortgage ® will generate a recurring monthly cash revenue stream from payments by your Borrower. This is an attractive feature relative to many other investments. Reinvest the money or spend it however you choose.
You can rest assured that your investment is protected with a registered mortgage lien as filed with the proper government authority. This can be especially important when an unforeseen event occurs, such as the death of the Borrower, or a Borrower’s divorce.