shelley1991
Returning Member

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It is my primary residence that I have lived for several years and still currently live at.  She does not live here but may move in if I leave.  The home has over $600,000 capital gains.  Both she (after living 2 years) and I can claim $250,000 exclusion.  If home was sold today, I would pay taxes on $50,000 and she would pay taxes on $50,000. 

 

However, this is the confusing part.  Assuming no home value change.  She feels that once I am off deed, she will be taxed based on $350,000 ($600,000 capital gains minus $250,000 exclusion) if the house is sold after 2 years.  So she thinks that I should pay her an additional percentage for this taxed amount.  So I would be taxed twice?

 

Would the gift tax apply in this situation instead?  Thank you.