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Mom Selling Her Home |
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My Mom is selling her house and moving in with me. Is there a way she can open a type of bank account to use the proceeds to pay the mortgage on my house without having to pay taxes on the proceeds from her sale? We were hoping for an option like this so that she can gain some interest on her money and we can still pay off our mortgage. If you have any other suggestions all would be welcomed. Thanks! |
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If your mother has owned and occupied her house for at least two of the five years before she sells it (and I'll bet she has), then she can take up to $250,000 profit without paying any federal capital gains tax. That tax break is known as the homsellers exclusion. If she's been there for many years, she can subtract from the sale price not only her original cost, but money spent on permanent improvements over the years -- new roof, new towel rack, fences--it's along list. Besides, her cost basis for the house might have gone up when her husband died.
My guess is that she won't owe any federal tax at all on her profit, which is known as her capital gain. |
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Edith
Originally published on November 21, 2007 |
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