Would the person whom the property was signed over to be responsible for capital gains taxes? If so, would that person have to pay on 100% of the profit they realize? Or would the original sales price and improvements be taken into consideration? And could they take the $250K exemption?
Thanks, Darryle. I am still confused on one point. My friend quit-claimed the house to me. He paid $150,000
for the house and put $15,000 into improvements. After three years, he signed the house over to me. Since then, I have put $30,000 into improvements. I have now lived in the house for 30 months. If I sell the house for $425,000, what is my cost basis? $395,000($425,000-$30,000) or $230,000($425,000-$150,000-$15,000-30,000)? Basically, will I have to pay capital gains taxes after I take my 121 exemption? Thanks.
If you have both owned and occupied the property at least two of the five years prior to sale, then your profit is tax free after you take the Section 121 exclusion.
No you are not responsible.
Would the person whom the property was signed over to be responsible for capital gains taxes? If so, would that person have to pay on 100% of the profit they realize? Or would the original sales price and improvements be taken into consideration? And could they take the $250K exemption?
Thanks, Darryle. I am still confused on one point. My friend quit-claimed the house to me. He paid $150,000
for the house and put $15,000 into improvements. After three years, he signed the house over to me. Since then, I have put $30,000 into improvements. I have now lived in the house for 30 months. If I sell the house for $425,000, what is my cost basis? $395,000($425,000-$30,000) or $230,000($425,000-$150,000-$15,000-30,000)? Basically, will I have to pay capital gains taxes after I take my 121 exemption? Thanks.
Reread my response. I said,
If you have both owned and occupied the property at least two of the five years prior to sale, then your profit is tax free after you take the Section 121 exclusion.
Your friend is out of the picture.