Legal Question in Real Estate Law in California
My sister and I co-owned a house as joint tenants for 25 years. I decided to move out of the area and she refinanced with a cash out and paid me about 1/2 of what the house was appraised for. I signed a quite claim deed as part of the refinance. How do I report the "sale" or "conversion" on my taxes? I am no longer on the mortgage or deed. Do I still qualify for the tax exempt of under $250,000 profit?
Thank you!
1 Answer from Attorneys
You have sold your share of the house so you would have ordinary income for the difference between the basis you have and the amount you sold your share for. I would guess that the exclusion would be for only the first $125,000 as otherwise when your sister sold her part she might be denied any exclusion. She will, however, end up having the proeprty reassessed and the property taxes may go up.
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