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I've been told these are sales to family members. I'm curious about this type of transactions:
1. Is it true that these are family member transaction? Could it occur for other circumstances?
2. Can it occur for other purposes?
3. In general are these transactions true? Meaning, only that much money changed hand?
4. If below-market sale is allowed, is there a limit on how low this can go? Can it be $100 or even $1?
5. I think I know the answer but still have to ask: Does this below-market transaction price affect the property tax base?
6. Does this below-market transaction price affect the seller's capital gains/loss?
7. Does this below-market transaction price affect the buyer's cost basis?
8. Does this below-market transaction price affect the estimated prices for the same neighborhood? I know if the transaction price is higher it can lift the estimate of the neighborhood (RE agents like to brag that they "set a new comp"...)
9. Are there other implications from this below-market transaction price?
I've been told these are sales to family members. I'm curious about this type of transactions:
1. Is it true that these are family member transaction? Could it occur for other circumstances?
Could be.
2. Can it occur for other purposes?
Yes.
3. In general are these transactions true? Meaning, only that much money changed hand?
What difference would it make ?
4. If below-market sale is allowed, is there a limit on how low this can go? Can it be $100 or even $1?
There is no limit and no reason to restrict it.
5. I think I know the answer but still have to ask: Does this below-market transaction price affect the property tax base?
Absolutely none.
6. Does this below-market transaction price affect the seller's capital gains/loss?
That would be best asked to and answered by a CPA.
7. Does this below-market transaction price affect the buyer's cost basis?
What difference would it make ?
8. Does this below-market transaction price affect the estimated prices for the same neighborhood? I know if the transaction price is higher it can lift the estimate of the neighborhood (RE agents like to brag that they "set a new comp"...)
Doesn't matter.
9. Are there other implications from this below-market transaction price?
What difference would it make ?
My answers are in BOLD. I am not a CPA nor an attorney. I was a Realtor for about 5 years.
Lots of properties change hands off-market and to family members. It's really not hard to understand why Sometimes that is the amount that changed hands, sometimes no money changed hands. Sometimes a family member has inherited shares in a property and is only buying out remaining shares.
Appraisers and Tax assessors tend to avoid using properties that are not "arm's length" transactions, in their comps, for these reasons. There's no way to know the answer to your questions.
Lots of properties change hands off-market and to family members. It's really not hard to understand why Sometimes that is the amount that changed hands, sometimes no money changed hands. Sometimes a family member has inherited shares in a property and is only buying out remaining shares.
Appraisers and Tax assessors tend to avoid using properties that are not "arm's length" transactions, in their comps, for these reasons. There's no way to know the answer to your questions.
Yes I understand the sell-to-family part. I am just thinking, depending on the features of this type of transaction, whether this can be a legit tax saving/tax deferring tool....
For example, if the below-market price is used to calculate capital gain/loss of the seller, then it can defer tax.
My answers are in BOLD. I am not a CPA nor an attorney. I was a Realtor for about 5 years.
Thank you. Let me clarify the questions you raised:
3. This question is trying to understand in real life how people utilize this type of transaction.
7. #7 really goes with #6, both are true or both are not true. IF TRUE, then this is a tax deferment tool. Suppose grandpa bought a townhouse in Manhattan in 1950 for $100K, now that townhouse is worth $2 mil. Grandpa can sell the townhouse to son or grandson in 2021 for $100K, and pay no capital gains tax. Of course, the son will have a huge tax bill to pay later when the house is sold again. (Unless it is sold to another family member?)
9. Just trying to fully understand the pros and cons. For example, I just thought of another potential implication: Will this have gift tax implication? Essentially one party is giving value to another.
The OP has good questions, and I would add this one, which I don't believe has been brought up:
Does a below market transaction affect appraisal value of similar homes in the same neighborhood (i.e. "comps")?
For instance if my home, and homes in the neighborhood which are very similar are in the $300K range, but if my neighbor sells her home, very similar and next door to mine, to her son for $50K so she can move into a townhome, would that affect me if I were having an appraisal done to refinance my home? Or would the appraiser realize this wasn't an arms-length transaction and adjust the appraisal for my home accordingly?
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Sometimes that is the amount that changed hands, sometimes no money changed hands. Sometimes a family member has inherited shares in a property and is only buying out remaining shares. 
