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Hi all, thank you in advance for any help you can give me.
My m-i-l passed away in March 2011. My husband was a joint tenant on the title of her condo. When she passed, the condo became his. We are now selling the condo. Do we owe any taxes when we sell it? The condo has not changed much in value from the date of her death.
What kind of taxes? Inheritance taxes? No. He didn't inherit it. He already owned it jointly.
Are you asking about capital gains?
Yes, I think I am talking about capital gains. Is it valued at the time of her death or at the time she initially purchased it?
The value of your m-i-l share will be at the date of her death and the value of your husband's share will be his cost basis. If you have capital gain, you must report it on schedule D (form 1040) if the gain is more than the exemption amount or $250,000 (on the sale of main home).
When this condo sold the gain should count as income for that year.To calculate the gain is not simple.You had to know how much his mother to pay to buy this condo which should including all legal fee,apply mortgage fee and the price,then how much to put in for remodeling which will increase the valve of this condo.All this add up take out from the money you get for this selling.There are a new law you can exempt to pay fed tax if this is a main house of him under 500,000.but only once life time.Sure your husband don't want to do that should save for your living house.Then other question,since this condon legally is own by he and his mother after she died her share go to him how it count then I don't know.Should consult a real estate law accountant.
Quote:
Originally Posted by wauya
This was answered, correctly I might add, by a Accountant.
What "new" Law? Please give the citation.
The tax board operates the same as other technical boards - correct info is important. This isn't about opinions.
How title to the condo is conveyed after her death has been answered - you did read that they owned it JOINTLY, right? I've never heard of a real estate tax accountant.
Thank you for wanting to help others on this site. However, we take pride in the accuracy of the advice we give here. And your response here has a lot of inaccuracies. For example, the law on exempting capital gains on the sale of a primary residence is not new. Its been around for a while. If you are referring to a different rule you need to cite the actual statute.Quote:
Originally Posted by wauya
You also seemed to miss the way the property was owned and the fact that one of our acknowledged experts already answered this question. If you want to help others, please make sure the advice is accurate and applies to the question asked.
Please don't pick this small thing,I never say I AM 100% correct.This base on taxpayer relief act 1997 I feel new for me.It say that if is primary resident,single owner can exempt tax up to 250,000 gain.Two owner will be double,once life time.I said real estate law accountant,I mean familiar real estate law accountant.
Scottgemm,
Thanks for judge my answer.you must be an expert in this field.You think the question been clearly answer.My answer has no valve and inaccuracy.May be I am dump I still not clear the answer; .first I am not sure the share of mother ownership give to her son is consider inheritance benefits or not then how to tax.Second:this condo is legally owner by mother and son.Did any records show he pay any money when this condo change hand or he pay any mortgage,If not then son's ownership is consider as a gift from his mother then how to calculate the tax.Expert please clear my and the asker's question.Thanks.
You are missing the point. If you aren't sure that you are 100% correct then you shouldn't be answering the question.Quote:
Originally Posted by wauya
The question was clear. The OP's husband was a joint owner. When the mother died, the property became solely his as survivor. The cost basis for the mother's half was the value at the time of death. The cost basis for the husband was what he paid. Since he probably didn't reside in the home he may not be able to claim the residential sales exemption.
Thanks fast response.I am not ask how to calculate mother's share.Before the condo sold hard to get the fair valve.I still not clear your answer.Is first question is yes? And second is yes or no?thanks your time.I answer question just want to share what I know.Who can prove 100% right?Are you?
Not true, an appraisal should have been done at the time of the mother's death to get the cost basis for her share. Unless the deed said otherwise, the shares would be 50/50.Quote:
Originally Posted by wauya
There is NO issue of inheritance here since the property was owned jointly with right of survivorship. The condo passed outside the estate. Yes we don't know what consideration was given for the son to be added to the deed. But that is immaterial. The son's profit is based on his cost basis. If he received it as a gift, then his cost basis is zero. We don't know when he was put on the deed so the issue of gift taxes may have been taken care of long ago and it wasn't part of the question asked.Quote:
Originally Posted by wauya
Again, its nice that you want to share, but you need to be more careful of the accuracy of the advice you give. In the technical forums, its generally easy to prove right and wrong. And no I'm not 100% right, but my track record is very good, since I'm careful that I don't respond to a question unless I'm sure of the answer.Quote:
Originally Posted by wauya
Thank you all for your help. I need to add more info it seems.
My husband was put on the deed 7 years ago when my m-i-l purchased the condo for $200k cash. He did not put any money toward the purchase. She passed away in March 2011 and the condo is now being sold for $139k.
My husband did not pay any gift tax at the time 7 years ago.
Does he owe gift tax? And if so, how is that calculated?
Thanks so much!
Your husband would not have paid gift tax, his mother would have had to do so, since she was giving the gift. If she did not do so, don't worry about it. After 7 years I doubt if the IRS will come for it.
However, the question now becomes what his tax basis is. Its either zero since he paid nothing or $100K which is half the purchase price (plus improvements). To be frank I don't know the answer, so one of our tax experts will help with that. The tax basis for the MIL's share is 1/2 the value when she died.
So either he has a $70K gain or a $30K loss.
Scott;ether he has 70k gain or 30k lose.May I ask he put no money and got 139 k where other 69 k gain count.Since this case not consider inheritance.Please make it clear. Thanks.
The OP stated that the condo is being sold for about what it was worth when the mother died. As we have said, that means the cost basis for her share is about the same hence no profit or loss. Half of $140 is $70 (I'm rounding here). Since his cost basis is either $0 or $100K, then he has either a $70K gain or a $30K loss. Simple math. One of the things you don't seem to be understanding is that there are TWO cost basis here. One cost basis for his half based on when the property was purchased, the second for the mother's half which is based on the value when she died.
Scott,thanks very much answer this again.Sorry I still not clear.HE real got 139k on that year.Is this consider income of that year.If he admitted not put any money in this house you think IRS would accept taxible only 70k.Same question,if he put 100k in the house now got 139k,you think IRS will accept he claim 30k lose.Please clear my doubt.thanks again.
I've answered this. You seem to keep missing that there are TWO cost basis. His half and the mother's half. Since he got full ownership on his mother death, then the cost basis for HER half is based on the value when she died. If the value when she dies was $140K, then her basis was $70K so her half is a wash. You then compare the remaining $70K to his cost basis to compute HIS gain or loss.
If this is not consider inheritance why need to care his mother's share valve.He own the full valve after his mother died.The tax base of him should consider the whole gain he got. Thanks your times.
Because to figure out what a person's gain or loss is you need to know their tax basis. And their tax basis is determined by when they acquired the property and for what price.
He acquired his mother's share at her death for the value at the time.
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