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Received Property from Father |
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I've lived for the past 4 years in arizona in a house my father owned.
Last year he transferred my name to title, and I took out a new mortgage for 150k. My father owed 100k however had a 150K cost basis at the time of refinance with a house appraisal of 185K. The home's current mkt value is ~250K. My father's intent was to transfer me his tax cost basis of 150K, use gifting law to transfer me equity in house at time of sale without him paying tax, and finally allow me to sell the house after 2 years of living and be protected up to 250K of profit from capital gains.
It's been about 14 months since my name is on title. I am interested to sell and purchase a new home, however he claims I will owe ~15k in capital gains taxes whereas if I wait another 10months, I can avoid.
I am hoping a tax professional can validate my father's assumptions.
thanks |
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The mortgages have nothing to do with the tax calculation. And yes, you did take over your father's cost basis with the gift.
To use the homesellers exclusion and take up to $250,000 profit free of federal capital gains tax (twice that if you're married filing jointly) you must have owned and occupied the place as your main residence for at least two of the five years before you sell. State capital gains regulations may be different.
Sounds as if you haven't owned it for two years yet. |
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Edith
Originally published on October 31, 2007 |
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