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Real estate capital gains: sale date vs recording date
My question is, what does the IRS use to determine the start date for me "living" there? I want to avoid capital gains tax which is a minimum of 2 years residence and ownership.
I have spoken to several accountants and none of them can answer this question definitively. Thank you
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Real estate capital gains: sale date vs recording date
The answer is:
The timer for when ownership starts is based on the date the sale is recorded to me with the county. This means if I want to avoid capital gains I need to "own" the property for 2 years after we record the sale/transfer to me with the county.
The 2 years of ownership and 2 years of residence (within the 5 years preceding the sale) do not have to be the same 2 years.
This can get very complicated. You might want to read up on all the rules in IRS Publication 523, Selling Your Home, which you can download from the following link.
https://www.irs.gov/pub/irs-pdf/p523.pdf
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Real estate capital gains: sale date vs recording date
The answer is:
The timer for when ownership starts is based on the date the sale is recorded to me with the county. This means if I want to avoid capital gains I need to "own" the property for 2 years after we record the sale/transfer to me with the county.
The 2 years of ownership and 2 years of residence (within the 5 years preceding the sale) do not have to be the same 2 years.
This can get very complicated. You might want to read up on all the rules in IRS Publication 523, Selling Your Home, which you can download from the following link.
https://www.irs.gov/pub/irs-pdf/p523.pdf
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Real estate capital gains: sale date vs recording date
Let's start with the GIFT ... he is not selling the home ... he is gifting it to you. So no one will report a sale on the home on a tax return.
He will have to file a gift tax return to report this transaction.
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Real estate capital gains: sale date vs recording date
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Real estate capital gains: sale date vs recording date
The fact that you have lived there for 7 years doesn't help to meet the ownership requirement. The 2 years of ownership and residence are two separate requirements. You have to meet both requirements.
Claiming a deduction for the mortgage interest, or not claiming it, has nothing to do with the ownership or residence requirements.
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Real estate capital gains: sale date vs recording date
Home ownership begins on the date the deed is transferred from the seller (or donor) to the buyer (or recipient).
"Living there" for purposes of qualifying for the capital gains exclusion begins on the date the owner first lives in the home as their primary residence.
Remember that, since you're receiving the home as a gift, when you eventually sell the home you will need to know your father's adjusted cost basis in the home as of the date of the gift, in order to calculate your capital gain.
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Real estate capital gains: sale date vs recording date
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Real estate capital gains: sale date vs recording date
This can get very complicated. You might want to read up on all the rules in IRS Publication 523, Selling Your Home, which you can download from the following link.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p523.pdf">https://www.irs.gov/pub/irs-pdf/p523.pdf</a>
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Real estate capital gains: sale date vs recording date
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