Capital gains on sale of home

Posted by admin on October 18th, 2007 at 04:17pm

Q. I need some advice on capital gain issue I have.

We purchased a home in May 2005 for $235,000 my mother in

law invested the 20% downpayment and we agreed to a 50/50

split of the profits (or loss) when we sell, but because she

is out of state and not available she does not currently

appear on any of the paper work. We currently pay the

mortgage and reside in the house.

We considered this house a temporary residence and

investment while build another house.

Now that we are getting ready to sell it seems the profit

will be considerable and the capital gains much higher than

we ever imagined.

Question? how can we legally split the profits so she would

pay capital gains taxes at her (lower income) rate and my

wife and I at our higher income rate. the profit would seem

to be $20,000 apiece after selling expenses.

Any other way to handle this situation, we have a couple of

months.

A. I’m presuming you and your Wife file jointly when I say

this, but you don’t even have to report the sale of a

personal residence on your return as long as you have lived

in it for 2 of the past 5 years and the profit from the sale

is no more than $500,000.

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