What is an arm's length transaction in real estate?

Let’s dive into the details below. What is an arm’s length transaction? In real estate, an arm’s length transaction is when the buyer and seller each act in their own self-interest to try to get the best deal they can. In most sales, a seller is trying to make a large profit, while the buyer is trying to pay the least amount of money possible.

What are the tax implications of arm's length transactions?

Tax implications of arm’s length transactions How arm’s length transactions ensure fair market value What is an arm’s length transaction? In real estate, an arm’s length transaction refers to situations in which there is a transfer of property and the buyer and seller act independently of one another.

Are arm's length transactions fair and equitable?

Tax laws throughout the world are designed to treat the results of a transaction differently when parties are dealing at arm's length and when they are not. As noted above, one of the main benefits of arm's length transactions is that the transaction is fair and equitable. This is especially true when it comes to real estate deals.