Buying out sibling advice
My sister and I inherited our mother’s home in California upon her death in 2019. It was a rental prior and still is. Income from the rental has helped pay for both of my children’s college education, which is what my mother would have wanted and my sister was totally on board and was very supportive, although she originally wanted to sell it and split the proceeds since she lives in So Cal. Now that my daughter is almost done with school, my sister would like my husband and I to buy her out. We are agreeable to that since we are planning for retirement in a few years and would like the monthly cash flow. We would need to get a loan to buy her out. I got an appraisal a few months ago and it came back a little over $1M. The step up appraisal upon my mother’s death was $775k. It’s not in the greatest condition but it is in the Bay Area where the market is crazy. We have tentatively agreed upon a buy out price of $425k, although she only needs $300k now. Can she “gift” us the balance now and sign a quit claim deed? Note: we are very close and my sister is doing well financially and does not “need” the money. She has a long term partner and no children. But she is entitled to what is hers and would like to honor that. Please provide input if you have been in a similar situation and/or any insight I may be overlooking. My CPA has been slow in responding so I’m hoping to hear back from this tribe. Thank you!