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danke372
Returning Member

Capital Gain

There are four of us that are invested in Real Estate(house).  Each of us are on the title.  Sale would bring an estimated $200,000 long term capital gain. 

 

My understanding is, the gain would be allocated to each investor.  Calculates out to $50,000 gain each. 

My question is This:   Is one of the four investors permitted to claim the entire $200,000 gain on his/her tax return, settle up with the tax with the IRS,  and thereby absolve the others from taxation from this taxable gain?

4 Replies
ThomasM125
Employee Tax Expert

Capital Gain

You cannot assign the total gain to just one individual from what you described.

 

What you describe is a joint venture, and as such each partner would have to report their share of gains or losses. However, the partners can decide the ownership percentages of each member based on various criteria, the most common of which would be the amount of money invested.

 

You are not free to establish percent ownership based on simply tax considerations. It must be based on practical considerations such as investment in the venture and amount of time devoted to the management of it. 

 

 

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Hal_Al
Level 15

Capital Gain

A question you didn't ask is do you really have a capital? Or do you really have a business profit?

 

Most likely, you report it as a  business profit on Schedule C.  Alternatively, you report it as a capital gain on form 8949 and Schedule D.

 

For more info, in making that determination, see a similar question at: https://ttlc.intuit.com/questions/3399983-tax-issues-regarding-flipping-of-a-house 

And references at:

https://www.hrblock.com/tax-center/income/real-estate/flipping-houses-taxes/

https://fitsmallbusiness.com/taxes-on-flipping-houses/  https://www.lendinghome.com/blog/how-to-maximize-house-flipping-tax-benefits/

danke372
Returning Member

Capital Gain

My understanding It is a capital gain.  Family house that was deeded over.    Thus the question   Can one of the owners for tax purposes take the entire gain on the tax return and absolve the others from paying any tax?

Hal_Al
Level 15

Capital Gain

You follow the money.  If the proceeds are split evenly 4 ways, then the tax reporting is split evenly, 4 ways.

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