selling ahouse

Forum|Forum|7 years ago
July 24, 2018
1 reply
20 views

My daughter and I are going to do a quit deed claim on her home. She is moving out of state and needs the house paid off before she can get a new mortgage. I am going to pay off her 80k mortgage and then put about 15k into the house to get it ready to sell. I then will sell it. I expect to clear about 10k after expenses which I will mail to her. I only am getting my expenses recouped. I will list the house within one month of paying off the mortgage. What would my liabilities be with the IRS if I am not profiting in any way? The realtor said she should expect to sell it at around 110k. Thanks to any that can help.

Carl

Level 11

There's issues with your plan. Weather it's a problem for you two or not, is not my call though. Only you two can decide.

For starters, have you figured in the capital gains tax exclusion? If your daughter has lived in the house for at least the last two years she owned it, then when it's sold she is exempt from paying taxes on the first $250,000 of gain. If she does a quit claim to you, that exclusion possibility goes away.

Stinkerbellkity

Level 7

She is basically gifting you the house, so your cost basis will be the same as hers. You an add the cost of any improvements you make. Your gain is your selling price minus expenses of sale, less your cost on the house The mortgage payoff plays no part in the gain calculation. Any gain is taxable to you, whether you give it to your daughter or not.

Carl

Level 11

Was hoping he would have posted back by now. The way he's talking about doing this is going to cost them tax-wise. If they do it "the right way" and if the daughter has lived in the house for at least 2 of the last 5 years she owned it, then not only will there be no tax on the gain (based on the numbers provided) but she wouldn't even have to report the sale on a tax return, provided a 1099-S is not issued.