Capital Gain

[KG511]

I am on my father's and step-mother's deed.  The three of us have 33.33% interest in the house.  I do not live with them and have my own separate house.  They want to sell the house and buy another house in another state.  Will be I be responsible for capital gains on my share of the interest?  If so, can my dad receive the full proceeds of the sale and gift me my portion?

I really appreciate your input.

Thank you

[rjs]

You will have to pay tax on the gain from the sale of your share of the house.

Each owner has to receive his or her share of the proceeds from the sale. Trying to play games to hide the gain and evade the tax is tax fraud. It will just get you in trouble with the IRS and end up costing you more than if you just pay the tax. (It's not your "father's and step-mother's deed." It's your deed too. All three of you are on the deed.)

You should consult a local tax professional to determine your basis for your share of the house. That will determine the amount of taxable gain that you have. Your basis might be different from your father's and step-mother's basis.

[Opus 17]

You must report 1/3 of the selling price since you are 1/3 of an owner.  Your capital gains will be the difference between the selling price and your cost basis, and because you don't live in the home, you will owe capital gains tax on your gain.  

A simplified version of cost basis is 1/3 of what your parents paid to buy the home.  There are adjustments that must be made for improvements (adds to the cost basis) and business use of the home (reduces cost basis).  There may also be an adjustment if your (bio) mother and father owned the home, and your mother died, and then your father married again.   Best way to work that out is to see a professional who can ask you the right questions in person.