[WSBARP] who pays the tax on gain?
Kary Krismer
Krismer at comcast.net
Sat Apr 10 18:00:33 PDT 2021
Why is the mother on title if she didn't contribute any funds? Was she
just co-signing on a loan or something? If so, couldn't it be argued
her ownership interest is nominal?
Also it's unclear a bit because you started by referring to parents and
then only to the mother. Are the mother and father's situations identical?
I would agree with the need to consult a tax attorney, both to resolve
any gift tax issues and any gain on sale issues. But if the parents'
interest can be seen as just a nominal interest with minimal tax
consequences of any type, then it might be worth clearing up before
selling so the escrow doesn't face these issues. If escrow handles the
deed I would assume they issue a 1099 to the all the grantors (which is
an assumed answer to one of your questions--I'm not certain).
Kary L. Krismer
206 723-2148
On 4/10/2021 12:24 PM, Douglas Scott wrote:
> Thanks for your thoughts. The mother did not contribute any funds or
> receive any income from this rental property which is in the mothers
> name.They now want to sell it. Mother doesn't want to gift it to the
> daughter because that subtracts from her exemption as a gift. Mother
> does not want any tax liability. Since the 1099s go to all owners and
> the mother is the only owner she would have the entire liability.
> Could a trust of some kind be created with the daughter as a beneficiary?
> *DOUGLAS W. SCOTT*
> Rainier Legal Advocates|LLC
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> On Sat, Apr 10, 2021 at 11:49 AM John J. Sullivan <sullaw at comcast.net
> <mailto:sullaw at comcast.net>> wrote:
>
> Doug:
>
> I haven’t been able to definitively research this. Somewhat
> surprisingly a quick answer did not pop up.
>
> Here’s my two cents worth as a tax attorney.
>
> Did the parents help with the down payment or mortgage or other
> expenses? They are presumed to own 50/50 unless otherwise
> established.
>
> On sale, the daughter may be eligible for the gain exclusion on
> the sale of a primary residence, assuming she qualifies under the
> ownership and residence tests. The parents’ capital gain is on
> investment property, assuming no treatment as a rental. They
> probably report on their separate returns and a 1099 goes to all
> owners.
>
> I would be careful about a pre-sale gift. That would mean the
> daughter would recognize 100% of the gain. Does it exceed her
> $250K exemption? Also, I am not sure she would qualify for it on
> the gifted portion because she has neither owned nor resides in
> that portion long enough.
>
> I would suggest they consult a tax attorney/CPA. And consider
> either having the daughter make a gift of the tax the sale adds to
> the parents return, or, if they don’t want the gain on sale, they
> can gift their share of the gain net of the taxes.
>
> Just an early Saturday morning first draft of an analysis without
> thorough research.
>
> John J. Sullivan
>
> Sent from my iPhone
>
>> On Apr 10, 2021, at 10:52 AM, Kaitlyn Jackson
>> <kaitlyn at dimensionlaw.com <mailto:kaitlyn at dimensionlaw.com>> wrote:
>>
>> Cant the parents just quit claim deed the house to the daughter
>> as a gift?
>>
>> Sent from my iPhone
>>
>>> On Apr 9, 2021, at 11:14 AM, Douglas Scott
>>> <doug at rainieradvocates.com <mailto:doug at rainieradvocates.com>>
>>> wrote:
>>>
>>>
>>> Parents buy a house for their daughter. All 3 are on title, but
>>> parents want nothing to do with the house. Upon the sale of the
>>> house the parents don't want any tax liability. How do the
>>> parents avoid this and which one of them (or all) get the
>>> 1099S? Is it whoever gets the payment?
>>>
>>> *DOUGLAS W. SCOTT*
>>> Rainier Legal Advocates|LLC
>>>
>>> 465 Rainier Blvd. N., Suite C
>>> Issaquah, Washington 98027
>>> 425.392.8550 (tel)
>>> 425.392.2829 (fax)
>>> *
>>> *
>>>
>>>
>>> www.rainieradvocates.com <http://www.rainieradvocates.com/>
>>>
>>>
>>> Notice: This communication, including attachments, may contain
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