[WSBARP] who pays the tax on gain?

Sat Apr 10 18:46:53 PDT 2021

Doug:

If it is actually the case that mom contributed nothing to the down payment or any payments on the mortgage, that she was placed on title solely to enhance the credibility of the transaction to the bank. Then I would consider having mom quitclaim her TIC interest to daughter prior to the sale, using conveyance language that would comport with claiming the REET exemption for clearing title under WAC 458-61A-415. 

WAC 458-61A-215: <https://apps.leg.wa.gov/WAC/default.aspx?cite=458-61A-215> 

Once that’s “old and cold,” the sale by the daughter can close, be reported solely under her SS# on the 1099 and assuming she has fulfilled the ownership and residence rules should be able to apply the full $250K exemption to 100% of the sale. This also eliminates the complications of characterizing it as a gift. 

John J. Sullivan

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Douglas Scott
Sent: Saturday, April 10, 2021 12:24 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] who pays the tax on gain?

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

465 Rainier Blvd. N., Suite C 

Issaquah, Washington 98027 

425.392.8550 (tel)

425.392.2829 (fax)

 <http://www.rainieradvocates.com/> www.rainieradvocates.com

Notice: This communication, including attachments, may contain information that is confidential and protected by the attorney/client or other privileges. It constitutes non-public information intended to be conveyed only to the designated recipient(s). If the reader or recipient of this communication is not the intended recipient, an employee or agent of the intended recipient who is responsible for delivering it to the intended recipient, or you believe that you have received this communication in error, please notify the sender immediately by return e-mail and promptly delete this e-mail, including attachments without reading or saving them in any manner. The unauthorized use, dissemination, distribution, or reproduction of this e-mail, including attachments, is prohibited and may be unlawful. Receipt by anyone other than the intended recipient(s) is not a waiver of any attorney/client or other privilege

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)

 <http://www.rainieradvocates.com/> www.rainieradvocates.com

Notice: This communication, including attachments, may contain information that is confidential and protected by the attorney/client or other privileges. It constitutes non-public information intended to be conveyed only to the designated recipient(s). If the reader or recipient of this communication is not the intended recipient, an employee or agent of the intended recipient who is responsible for delivering it to the intended recipient, or you believe that you have received this communication in error, please notify the sender immediately by return e-mail and promptly delete this e-mail, including attachments without reading or saving them in any manner. The unauthorized use, dissemination, distribution, or reproduction of this e-mail, including attachments, is prohibited and may be unlawful. Receipt by anyone other than the intended recipient(s) is not a waiver of any attorney/client or other privilege

***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***

_______________________________________________
WSBARP mailing list
WSBARP at lists.wsbarppt.com <mailto:WSBARP at lists.wsbarppt.com> 
http://mailman.fsr.com/mailman/listinfo/wsbarp

PRIVILEGED AND CONFIDENTIAL:  This e-mail (including any attachments) is intended only for the use of the individual or entity named above and may contain privileged or confidential information. If you are not the intended recipient, or the employee or agent responsible to deliver it to the intended recipient, you are notified that any review, dissemination, distribution or copying of this e-mail is prohibited. Attempts to intercept this message are in violation of 18 USC 2511(1) of the Electronic Communications Privacy Act, which subjects the interceptor to fines, imprisonment and/or civil damages. If you have received this e-mail in error, please immediately notify us by e-mail, facsimile, or telephone; return the e-mail to us at the e-mail address below; and destroy all paper and electronic copies. Any settlement offer contained herein is made pursuant to Washington ER 408, and without admitting fault or liability on the part of this firm’s client(s) or its agents.  IRS CIRCULAR 230 DISCLAIMER:  To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code; or (ii) promoting, marketing or recommending to another party any transaction or tax-related matter addressed herein. 
***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***

_______________________________________________
WSBARP mailing list
WSBARP at lists.wsbarppt.com <mailto:WSBARP at lists.wsbarppt.com> 
http://mailman.fsr.com/mailman/listinfo/wsbarp

***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***

_______________________________________________
WSBARP mailing list
WSBARP at lists.wsbarppt.com <mailto:WSBARP at lists.wsbarppt.com> 
http://mailman.fsr.com/mailman/listinfo/wsbarp

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20210410/b602594a/attachment.html>