Legal Question in Real Estate Law in New Jersey

Capital gains on sale of property

I am buying out my wife and the deed will be transferred to my name as part of the PSA. If in the future I want to avoid capital gains on profit above $250k on sale of the property, can I leave my wife's name on the deed but reduce her share to 0.1%, so that upto $250k of gain can be assigned to her, which is tax free to her. What is the risk?


Asked on 1/29/07, 4:38 pm

2 Answers from Attorneys
Bernard J. Berkowitz Berkowitz & Raiken

Re: Capital gains on sale of property

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Answered on 1/29/07, 4:56 pm
Walter LeVine Walter D. LeVine, Esq.

Re: Capital gains on sale of property

You do not need your wife to get the $250,000 exclusion, if this is your primary residence. An individual gets this exclusion, which can go to $500,000 if there were a joint return. You do get a new basis step-up by buying out your "x". Your new basis is the original cost (1/2) since you bought jointly, plus 1/2 of any improvements, plus what you paid your "x" for her 1/2 share. If you occupied it for 3 out of 5 years before sale as the primary residence, you get the exclusion to reduce the profit on sale, using your new basis, plus closing costs. Contact me directly if you need more information.

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Answered on 1/30/07, 12:34 pm


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