Hi,
I have a follow up question to this topic. I hope this is the best place for it.
I have a situation where I have a property that I own with my Wife and Farther in Law. All three of us are on the deed and have an equal stake in the property (right of survivorship). This is a multi-family home and in the early years we all lived in the house for a couple of years. We moved out over 8-9 years ago and have been renting our half of the property. My farther in law still lives there and that is his primary residence.
So for my question in terms of taxes. If we go to sell the house, will the $250K capital gain exclusion only apply to my farther in law? For example:
We purchased the house for $330K, with $10K or so in closing cost, etc.. so our Cost basis is about $340K. We believe we could sell the house for around $600K, therefore claiming a profit of $260K. My thoughts were that we split the project 2 ways and the cost basis is also split two ways. Therefore 340/2 = $170K for each household. Then the profit is split in half $260/2 = $130K - sale expenses. So in this scenario you see the profit is less than the cost basis. Therefore do either parties pay any capital gain taxes?
Thanks,
-Andrew
