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Giving To Son |
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Mrs. Lank, My wife and I are 61 years old, we own our own home.We have a rental house that we purchased about 10 years ago.In order to raise money to help the children we refinanced the rental house two years ago.My question I have is there any way we could give the rental house to our son who will get a loan and pay off the house?I have heard at our age that you could sell a house one time and not pay any capital gains tax, does this apply?If not what is the best thing to do for the least amount of taxes?When we bought this house it was in bad shape and we completely remodeled the entire house, we have about $10,000 in materials, and all the labor was done by me and my family.I wanted to get out from underneath the rental house and help our son. |
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The special homesellers tax break you refer to applies only to your own residence, not to rental property.If you’re giving the rental house away, though, there’s no sale involved so capital gains tax in not a problem.You might have to file a gift tax return, but no actual tax would be involved.
Your son will take over your cost basis along with the property.That figure takes into account the money you’ve spent on improvements, but not any labor you didn’t pay for. |
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Edith
Originally published on September 6, 2006 |
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