Feb 14, 2026
As baby boomers reach retirement age, many families may find themselves in a situation where their parents may wish to sell the family home and downsize into a more manageable property. However, some families find themselves in a situation where one of the adult children isn’t ready to say goodbye, and instead wishes to purchase their parents’ home.
Keeping a beloved home in the family may be appealing, but it can come with a whole host of issues, especially when it comes to the perceived fairness of the transaction. Moreover, the parents could find themselves in an undesirable tax situation if certain steps aren’t followed.
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Imagine Genna, who has two siblings, Mark and Carolyn. Their parents are ready to sell their family home, and Mark has said that he would like to buy it — but that he cannot afford to pay the high prices that have become common in the area. On top of that, Mark also believes that the house will require extensive renovations, to the tune of $150,000, and that he should ultimately pay $2.75 million for the property.
Genna believes the house would fetch more than $3 million on the open market, and since the sale is critical for their parents’ retirement fund, she thinks it's unfair to ask them to sell under market price. Mark, on the other hand, says that keeping the house in the family is more important than money. So who is right, and what’s fair in this situation?
What risks are involved
Selling a home to a child for below fair market value can mean not only the possibility of disagreements between siblings, but also have possible tax implications.
In order to make sure that a real estate transaction like this is fair, the first step that a family should take is to have the home appraised, so that fair market value can be established (1). A professional appraisal will take the guesswork out of the sale, and also make sure all family members know what the asset is actually worth.
Since Genna’s brother Mark also wants to deduct renovation costs from the price, it would be worthwhile to have a professional home inspection done as well. While homebuyers often negotiate price based on possible costs for renovations (2), having the actual costs documented by a professional will once again help assuage any uncertainties some family members might have over the deal.
Genna’s family should also consider consulting a tax professional regarding any issues that might arise from her parents selling the home for below market value. They would likely have to file a gift tax form, and there could also be capital gains tax implications (1). Consulting with a tax professional can make sure that the sale will stand up to IRS scrutiny.
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The family might also consult a real estate attorney to make sure that the in-family transaction meets legal requirements and is properly documented.
However, consulting professionals to make sure the sale of the home is sound would likely not solve the disagreement between siblings. Mark would be getting a sizable gift from his parents if he were able to purchase their home below market value. Genna’s parents could consider deducting this amount from Mark’s future inheritance as a compensation.
If the parents want their children’s inheritance to be fair and equal, however, they should consider selling their home for fair market value. While emotions are likely to come into play when a family home is sold, and the idea of keeping the house in the family may be very appealing to the parents, the strife that this can cause between siblings should be weighed as well.
It’s nice to imagine your adult children gathering for holidays in the family home once you have passed on, but if there is infighting and bitterness around inheritance that imagined scenario won’t come true. For some families, selling the house on the open market might be the better move.
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
