How does a gift of equity work when you sell your Miami home to your child?
You sell the house for less than its appraised value, and the difference is a gift of equity that can stand in for your child's down payment. In Miami-Dade, the seller's doc stamps (0.6% on a single-family deed) are figured on the lower price actually paid. The discount is also a gift for federal tax purposes, so amounts over $19,000 per recipient in 2026 go on IRS Form 709, though a tax bill is unlikely.
By Lynley Ciorobea | November 5, 2026
Say a Pinecrest couple has their house appraised at $3 million and sells it to their daughter for $2.4 million. That $600,000 gap is a gift of equity. It is also a gift in the eyes of the IRS, and the paperwork follows. The families who get hurt are the ones who treat this like a handshake with a closing date attached.
Order the appraisal first. It sets the size of the gift, so a price picked before it can create a gift you never intended. Lenders want it anyway. Fannie Mae allows a gift of equity on a principal residence or second home, with a signed gift letter and a settlement statement that shows the amount. It can cover the down payment and closing costs, but not reserves. If the appraisal lands below what the family expected, the numbers move on both sides of the table.
What the discount does to your taxes
Start with the good news. In Miami-Dade, the seller pays doc stamps on a single-family deed at 0.6% of the consideration, meaning what is actually paid. On the $2.4 million price that is $14,400 instead of $18,000. One catch: Florida's rule treats a gift of mortgaged property as taxable on the unpaid mortgage balance, so if there is a loan on the house, have your closing attorney run the figure. (We covered the other seller line items in what Miami-Dade sellers pay at closing.)
Next, the gift tax. For 2026 the annual exclusion is $19,000 per recipient, or $38,000 from a married couple. Anything above that goes on Form 709. Filing is not paying. The lifetime exemption is $15 million per person, so most families never owe a dollar. The common mistake is skipping the form, which leaves the IRS clock running.
Your own gain works differently than you might expect. On a part-gift, part-sale, you subtract your entire adjusted basis from the money you receive, not a slice of it. You cannot deduct a loss if you sell below your basis. If this was your primary residence, the $250,000 or $500,000 exclusion may cover the gain. (Our capital gains post has the two-out-of-five-years test.)
Your daughter's side is quieter but just as real. Her basis is the greater of what she pays or your basis. The $600,000 you gave her is not added. Had she waited and inherited, the basis would generally step up to full value. That tradeoff is worth a CPA's hour before you sign.
Then the property tax. The Save Our Homes cap does not follow a house to just anyone. Miami-Dade's Property Appraiser lists transfers to spouses, to dependents of the previous exemptee, and corrections of title errors. An adult child likely starts over on a much higher assessment. She also needs title and permanent residence as of January 1 to claim homestead, so a December closing helps and a February one costs her a year.
Last, the one nobody wants to discuss. Florida looks back 60 months at transfers for less than fair value when someone applies for long-term care Medicaid. A $600,000 discount counts. If either parent might need care in the next five years, talk to an elder-law attorney before the contract, not after.
If the house sits in Coral Gables or Pinecrest, the appraisal is where I would spend the most care. Comparable sales on those streets can differ by hundreds of thousands, and a low number shrinks the gift and the loan at once. You can see how I approach those markets on my pages for selling in Coral Gables and selling in Pinecrest.
Before anything is signed, put your closing attorney and your CPA in the same conversation, with the appraisal on the table. If you would like a second opinion on that appraisal first, send it over.
Frequently Asked Questions
Can I sell my house to my child for less than market value in Florida?
Yes. A below-market sale to family is legal, and the discount is treated as a gift. Expect an appraisal, a written contract, a deed with the actual price, and a gift letter if your child uses a mortgage. Lenders treat it as a non-arm's-length deal and look closely at the paperwork.
Do I pay doc stamps on the gifted part of the price?
Doc stamps are figured on the consideration, meaning what is actually paid. In Miami-Dade the single-family seller rate is 0.6%. If a mortgage is on the property, Florida's rule can tax a gift on the unpaid loan balance, so confirm the number with your closing attorney.
Do I owe gift tax if I give my child a $600,000 discount?
Probably not. You must report gifts over $19,000 per recipient in 2026 on Form 709, but the lifetime exemption is $15 million per person. You file the form to document the gift, and tax is due only after the exemption is used up.
Does my child keep my Save Our Homes cap?
Generally no. Miami-Dade's Property Appraiser says the cap transfers only to spouses, to dependents of the previous exemptee, and to correct title errors. Your child should expect a reassessment and should confirm eligibility with the Property Appraiser.
About Lynley Ciorobea
Lynley Ciorobea is a Miami-born real estate professional known for helping homeowners successfully prepare, position, and sell their homes across Coral Gables, South Miami, Pinecrest, Palmetto Bay, and the surrounding southern Miami neighborhoods. Since 2007, she has built her business around thoughtful strategy, strong negotiation, and a marketing-first approach designed to help listings stand out in an ever-evolving market. A true local, Lynley grew up in Pinecrest and graduated from Palmer Trinity School before attending Duke University, where she earned a BA in Psychology. As the founder of the Lynley Residential Group, Lynley remains personally involved in every listing she represents. With more than $250 million in career transactions and more than 70 5-star Google reviews, she brings a local perspective that goes far beyond surface-level market knowledge.
If you are thinking through a pre-sale exterior plan for your own house, I am happy to walk you through the order of operations. Reach out anytime at lynleyresidential.com.