My sister and I own two separate houses jointly. The one house is deeded between her and I with a fmv of 700K orig purchased 20 years ago for 370 ) with depreciation an adj cost basis of 120K and mortgage balance of 530K . The other house is deeded between her and my husband valued at about 400K with a mtg balance of 225 and basis of 250K . Purchased in July 2006. Although fair market values are unequal our equity in both houses is equal at approx. 170 K each. We want to gift each other our share so that we will both own one house outrightly.. I will own w my husband the downtown house for 700K she will own the uptown house for 400K.. What are the tax ramifications of such a move should I sell my downtown home in two years after making it my primary residence with my husband for two years. Thank you

My sister and I own two separate houses jointly. The one house is deeded between her and I with a fmv of 700K orig purchased 20 years ago for 370 ) with depreciation an adj cost basis of 120K and mortgage balance of 530K . The other house is deeded between her and my husband valued at about 400K with a mtg balance of 225 and basis of 250K . Purchased in July 2006. Although fair market values are unequal our equity in both houses is equal at approx. 170 K each. We want to gift each other our share so that we will both own one house outrightly.. I will own w my husband the downtown house for 700K she will own the uptown house for 400K.. What are the tax ramifications of such a move should I sell my downtown home in two years after making it my primary residence with my husband for two years. Thank you

Hello Ax:

I see nobody has dropped by to help. I'll bet it's because your problem is more sophisticated than one that can be answered accurately online. We generally deal with generic real estate questions.

Indeed, in my view, your tax ramifications will be dependent on your entire estate, and not just the real estate end of it.

Your problem is best handled by a professional. I would consult with CPA. I would do it for TWO reasons: 1) he can direct you based on YOUR particular needs, and 2) if he's wrong, you can sue him. You can't sue me, even if I tell you absolutely the wrong thing.

excon

Yes, I read it several times, and I am nost sure it is a "gift" since you are actually giving something of value to the other, so in all aspect it is a sell with the other property as payment. And with the captital gains tax, if you were living in the other property as principle residee this can effect the answer. I would suggest you contact an expert on real estate tax for this in your local area.

I will agree your situation requires the assistance of a tax expert. Given the values of the properties, I think you can afford it.

However there is something I am aware of that would seem to fit you you. I forget the exact designation (I think it's a 1033 or 1133 Transfer), where you transfer ownership between parties. I think that may be the best choice for you, since it could make the transfer a wash.