I can't seem to find a clear answer.
In Minnesota, when you purchase a foreclosure property at Sheriff sale, it is subject to rights of redemption. Therefore, you take title via the Sheriff's Deed, you are responsible for all taxes, etc from that date forward, but you can't gain possession of the property until the redemption period has expired.
You can sell / transfer your interest in the property, but again it is subject to the mortgagor's and junior lien holder's right of redemption.
For the purposes of calculating capital gains tax (short term vs. long term) would you surmise that your acquisition date is the date you bid on and purchase the property at Sheriff Sale, or the date the redemption period expires? You have to put up 100% funds to buy the property at the sale, but the cloud on the title is in place until said redemption expires. It's my opinion the acquisition date is the date on the Sheriff's Deed since that is when you bought and paid for the property. My accountant seems to think it's as of the date redemption expires. I haven't been able to find any concrete info either way in the IRS website. Clearly this makes a huge difference in tax rate when it comes to short term vs. long term gains. Help?!?!?!
