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Discussion Forum Index --> Basic Tax Questions --> Sale of second home - lived in by son
Discussion Forum Index --> Tax Questions --> Sale of second home - lived in by son
Lancermc (talk|edits) said:
| 10 January 2008
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| Couple owns second home. Son lives in it and has since 2002. Couple makes mortgage payments. Couple wants to sell. Couple formally gifted 1/3 interest to son in June/2006. Couple have not lived in home last five years. Therefore, if sold today, all gain would be taxable. Question - In June/2008, son's 1/3 interest would be eligible for exclusion, would it not?
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Roxnpa (talk|edits) said:
| 10 January 2008
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| Wouldn't the sale include all parties? The son's interest wouldn't be part of the parents' proceeds. He could actually exclude up to $125K of his proceeds if he wanted under the sale of home exclusion since its his primary residence for the past 2/5 years. I think his basis would be the parents' basis at the time of the gift? All of the proceeds attributable to the parents' interest would be taxable.
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DZCPA (talk|edits) said:
| 10 January 2008
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| Yes, the son would be elgible. Based on Sec. 121(b)(1) I would assume each would get one third.
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Waynecpa (talk|edits) said:
| 10 January 2008
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| The basis would be 1/3 of the parents' original basis. You don't get a step up in basis by gifting interest.
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Riley2 (talk|edits) said:
| 10 January 2008
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| If the son is taking the property subject to an existing mortgage, his basis is the higher of one-third of his parents' basis or one-third of the mortgage balance on the date of the part-sale/part-gift.
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Lancermc (talk|edits) said:
| 11 January 2008
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| Hi Riley2, the mortgage is less than the parents basis, however I had not considered that aspect of it, thanks so much for pointing this out, I could have missed it. Thanks to all for the input, the public benefits when informed decisions are made.
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