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Get your taxes done using TurboTax
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.