Solved: Co-owner non-occupant capital gains question
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jlsweik
New Member

Co-owner non-occupant capital gains question

In June 2018, I was a co-borrower (also on title) of a home for my mother. I never resided in the home. We did about $12,000 of improvements prior to occupancy. The initial down payment and subsequent expenses were about 60 (mom)/40 (me), but there isn't a paper trail to indicate that split. The mortgage has come out of my bank account.   We are under contract to sell the home for approximately $50000 more than we purchased it for.  Are there any ways to reduce/avoid paying taxes on my portion of the gain come tax time? 

2 Best answer

Accepted Solutions
rjs
Level 15
Level 15

Co-owner non-occupant capital gains question

Since your name is on the title, you are a part owner of the home, but it is not your own principal residence. Therefore, I don't see any way for you to avoid having a taxable gain from the sale.


Fortunately, it is a long-term gain, so it will be taxed at a lower rate than ordinary income. If your total income (including your share of the gain on the home) is low enough, part or all of your gain might even fall into the 0% tax bracket for long-term gain.

 

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Critter-3
Level 15

Co-owner non-occupant capital gains question

Talk to a local RE attorney and get yourself off the deed if possible before it closes then only mom will get the 1099-S to report the sale.  

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4 Replies
rjs
Level 15
Level 15

Co-owner non-occupant capital gains question

Since your name is on the title, you are a part owner of the home, but it is not your own principal residence. Therefore, I don't see any way for you to avoid having a taxable gain from the sale.


Fortunately, it is a long-term gain, so it will be taxed at a lower rate than ordinary income. If your total income (including your share of the gain on the home) is low enough, part or all of your gain might even fall into the 0% tax bracket for long-term gain.

 

View solution in original post

Critter-3
Level 15

Co-owner non-occupant capital gains question

Talk to a local RE attorney and get yourself off the deed if possible before it closes then only mom will get the 1099-S to report the sale.  

View solution in original post

Carl
Level 15

Co-owner non-occupant capital gains question

but there isn't a paper trail to indicate that split.

The split is 50/50 unless you can prove otherwise. The need to provide proof would only come into play if the IRS had a reason to audit either one of you. Even for a 50/50 split.

Anonymous
Not applicable

Co-owner non-occupant capital gains question

I agree talk to an RE attorney.  however, since she has been paying 40% of the expenses and the mortgage she could be regarded as an equitable owner and taxed on her share even if her name is not on the deed,  It also raises issues of deductibility of the mortgage interest she paid. 

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