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Octoberlove
LIF Infant
Member since 1/06 160 total posts
Name:
Stephanie
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question about capital gain
Hi everyone,
I am hoping someone has advice for me. My inlaws are selling their second home. They would like to give my husband and I some money to put towards a down payment on a house. How can this happen without having to pay capital gain on the house that is being sold?
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Posted 6/29/07 12:15 PM  |
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MikesWife
Wanting...........
Member since 1/06 6887 total posts
Name:
Karen
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Re: question about capital gain
Someone please correct me if I am wrong, but I don't think the capital gain is protected on a second home. It has to your primary residence to avoid capital gain. No?
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| Posted 6/29/07 12:38 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: question about capital gain
Posted by MikesWife
Someone please correct me if I am wrong, but I don't think the capital gain is protected on a second home. It has to your primary residence to avoid capital gain. No?
that's right. They will pay capital gains on a second residence's proceeds.
Either way, they can still give you moolah!
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| Posted 6/29/07 12:52 PM |
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alnem
This is gonna be a good year!
Member since 2/06 9562 total posts
Name:
Emily
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Re: question about capital gain
Posted by MikesWife
Someone please correct me if I am wrong, but I don't think the capital gain is protected on a second home. It has to your primary residence to avoid capital gain. No?
yup. they must reside in the home to avoid capital gains.
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| Posted 6/29/07 1:35 PM |
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jerrysgirl
I love my hot dog!!
Member since 6/06 5357 total posts
Name:
E & J
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Re: question about capital gain
Posted by alnem
Posted by MikesWife
Someone please correct me if I am wrong, but I don't think the capital gain is protected on a second home. It has to your primary residence to avoid capital gain. No?
yup. they must reside in the home to avoid capital gains.
primary residence that they lived in for the past 2 out of 5 years.
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| Posted 6/29/07 1:52 PM |
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meghanmetz
LIF Adolescent
Member since 5/05 525 total posts
Name:
Meghan
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Re: question about capital gain
It's pretty hard to cash out and not pay the gain if they have not lived there as a primary residence for 2 of the past 5 years. The best they can do is a 1031 exchange, but there's some funky accounting going on there.
Best advice - talk to a tax accountant.
Message edited 6/29/2007 5:39:43 PM.
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| Posted 6/29/07 2:56 PM |
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MikesWife
Wanting...........
Member since 1/06 6887 total posts
Name:
Karen
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Re: question about capital gain
Posted by meghanmetz
It's pretty hard to cash out and not pay the gain if they have not lived there as a primary residence for 2 of the past 5 years. The best they can do is a 1231 exchange, but there's some funky accounting going on there.
Best advice - talk to a tax accountant.
The 1031 exchange would not help with the gift of money. The parents would have to buy another investment property in their own name in order to save for tax purposes.
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| Posted 6/29/07 3:00 PM |
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Octoberlove
LIF Infant
Member since 1/06 160 total posts
Name:
Stephanie
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Re: question about capital gain
Hi everyone
Thank you so much for your responses. I gave my inlaws all the information that you told me. You guys are the best!!!!!!
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| Posted 6/29/07 7:42 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: question about capital gain
what hekps hedge against paying capital gains is having expenses to offset it.
Did they make any improvements to the house?
I'm selling a second residence and I have all kinds of receipts for things we did to it.
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| Posted 6/29/07 8:10 PM |
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MrsBlueSash
Love my sailor
Member since 6/05 5793 total posts
Name:
Christian
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Re: question about capital gain
I think if they give you more than 11K to a single person than you are taxed. So you can give 11K to each of you. Any check more than 10K is reported to the IRS within 15 days. But you can also gift split, where your mom and dad can give a gift of 22K to a single person without tax. What is gift splitting? Gift splitting means a husband and wife can elect to treat a gift given by one of them as if half were given by each of them. The implications are simple: If one spouse gives $22,000 to someone during the year, and gift splitting is not elected, the IRS can treat that as a 22,000 gift by just the one spouse, even if the funds are drawn from a joint account. The IRS Form 709 can be filed for notifying the IRS that gift splitting is elected. (The instructions for the form are on the form itself.)
In any case, a CPA consult before buying, selling, sharing any money or property will really help you out big time before any transaction is made.
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| Posted 6/30/07 9:12 AM |
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