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JamesAD
Level 1

Capital gains

Hi, if I transfer my home that I’ve lived in for 4 years and is fully paid off to my brother using a quick claim deed and gift it to him with no money exchanged and he sells it does he also get my “holding period” so he isn’t charged as much capital gains?

4 Replies
tagteam
Level 15

Capital gains


@JamesAD wrote:

.....does he also get my “holding period” so he isn’t charged as much capital gains?


Yes, your brother would be able to use your holding period per Section 1223 (your holding period would be "tacked on", or added, to his own holding period).

 

Note that he would have to figure his basis with respect to a sale.

 

See https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/prope...

JamesAD
Level 1

Capital gains

Okay thank you for taking the time to answer, he wants to sell the home but he was nervous he would be hit very hard by taxes since he hasn’t lived there for 2 years. I bought the home for 725k when gifted it was about 825k and now it would be worth 940k-960k but if he gets my holding period it shouldn’t be to bad Correct? 

tagteam
Level 15

Capital gains


@JamesAD wrote:

....if he gets my holding period it shouldn’t be to bad Correct? 


He will get long-term capital gain tax treatment, which means the gain will be capped at 20% and, if applicable, an extra 3.8% for the NIIT (net investment income tax).

 

If he is close to the two year qualifying period, he might want to try and hold off until he gets to that point or investigate as to whether an exception is applicable.

 

See https://www.irs.gov/publications/p523#en_US_2020_publink10008996

JamesAD
Level 1

Capital gains

Okay thank you for the information appreciate it! 

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