No. 1: One of easiest and least expensive approaches is a private "owner-financed" sale. That's where your son makes monthly payments to you instead of having him go through a lender. This can be arranged pretty quickly and could save your son thousands of dollars in interest. Make sure the payments are tailored to your income needs, assuming you're not set for life financially. If you do go this route, arrange it so that if your son does default, the home returns to you automatically, whereupon you can sell it on the open market.
No. 2: You can also file a "quitclaim" document and add your son's name to the title. Even if he doesn't have the upfront money to pay you, you can still file the quitclaim, and he can take out a second mortgage and make payments to you.
No. 3: Another approach would be to have your son buy a flat-out 50 percent ownership in the house and arrange a mortgage for half the value of the home, then sign that cash over to you. That way, the home stays in the family, and it gives you some income.
No. 4: If you do sell the house to your son at a steep discount and he resells it fairly quickly, he might get stuck with a big capital gains hit. To avoid that, he must use the house as his principal residence for two out of the five years that precede the sale. Also realize that if you sell the home to him at too far below the market value, the IRS might stick you with a gift tax. Even with today's value slides, selling the place for 25 percent to 30 percent or more below its estimated market value to a family member might raise a red flag at the revenue office.
No. 5: Instead, you can help him out by giving him the maximum allowable annual tax-free gift of $13,000 per year to defray his housing expenses and by paying for your son's closing costs in the deal.
No. 6: While you'd like this transaction to be as fast and fee-free as possible, it would still be wise to have an appraisal performed for a more up-to-date estimate of market value. Plus, you should get a home inspection done that would catch any needed repairs. If you and your son do go the conventional mortgage route, an appraisal, title search and inspection would likely be lender requirements anyway.
No. 7: There's one other area where you shouldn't scrimp: the hiring of a real estate lawyer or similarly qualified attorney who can assist in the transaction and advise you of the pros and cons of gifting the house and the other scenarios discussed here.
Remember, protect yourself first. Don't jeopardize your retirement! Good luck.