Selling your house can be a stressful process. It’s such a large transaction, that there’s bound to be some worry, especially when there’s a stranger on the other end of the transaction. But how does the transaction change if you are selling to a family member? Although the situation is similar, there are some things that will change when selling your home to a relative.

Controlled Transaction

In a typical real estate sale, you are dealing with an arm’s length transaction. This is when neither party is acquainted with the other and both act in their own interest. When dealing with relatives, on the other hand, it is referred to as a controlled transaction. In this scenario, the IRS will generally look more closely into the transaction to ensure that everything was done correctly.

Gift of Equity

When selling a home to a family member, you may opt to give it as a gift of equity. In this case, you will not be giving the home to your relative for free. Instead, you will be selling them the home for a price below the fair market value. Upon getting the property appraised, you will need to fill out the Gift of Equity forms.


Conveyancing is the act of legally transferring property from one owner to another. In most property exchanges, both the buy and seller have their own conveyancers. However, when dealing with family members, you may choose to utilize the same conveyance solicitor, saving money for both parties. Although you may be tempted to skip hiring a solicitor, conveyancing is an important part of the selling/buying process. Your solicitor will ensure that legal obligations are met, contracts are drawn up properly, and taxes are paid.

Closing Costs

When selling your home to a relative, the closing costs will likely be cheaper than those of arm’s length transactions. Closing costs are bundled together and include appraisals, title fees and fees from other parties involved in the sale. When selling to family members, you can cut out many of the middle men, reducing the price you owe at the end of the sale. Additionally, you can skip the real estate agent, saving you money on commission fees.

Hard Feelings

Keep in mind that when you sell to a family member, unlike selling to strangers, you will most likely be interacting with this person on a regular basis. Business and family do not always mix, and you could end the sale with hard feelings toward one another.

Selling a home to relatives differs from selling to strangers in several ways. In many cases, the process can be less stressful, and both parties have the potential to save money.