Legal Question in Tax Law in New York

Re: capital gains tax

The gain on the sale of a residence is subject to capital gain tax; however the first $250,000 of gain (for a single person) is excluded from the calculation.

You can only claim yourself as a dependent.

I don't know what tax cut you refer to.

Putting another name on the deed would not eliminate the tax.

Re: capital gains tax

You indicate you currently have an attorney. This is obviously a major financial and life transaction. You are saying that you question the validity of your attorney's advice, or perhaps do not understand his or her advice completely.

The first thing you should do is go back to your existing attorney and ask for a complete explanation. If your attorney's responses are still unsatisfactory, then you need to consider retaining a new attorney.

No competent attorney will be able to provide you with an "answer" to your question over the Internet, because it involves a major financial transaction, tax-planning issues, perhaps estate planning issues, and there is simply not enough information provided to provide an informed and complete response.

For example--and this is just the beginning--you do not indicate what the sale price of the house is, nor do you indicate your cost basis. It is impossible to even begin to compute the tax due, or potential tax due, without this basic information.

There are certain exemptions that may be available, but that depends on your particular circumstances. Apparently, your current attorney has done the computation and has told you you will owe capital gain tax, but you don't understand why. You need to ask your attorney to answer that type of question.

Putting your daughter on the title will not entitle you to the benefit of any tax preference or deduction that you do not otherwise qualify for, if for no other reason than that you are contemplating a "sham" transaction, i.e. possibly tax fraud.

Further, if you put your daughter on the title to the property, she will have a legal ownership interest in it, which can create all kinds of tax liabilities, estate planning complications, legal complications, etc.

I will be happy to discuss your situation further, but under the circumstances, you would need to actually contact my office directly for a consultation and to retain me, if you wish to do that.

I strongly recommend that you consult with an attorney immediately so that you can explore your legal rights, obligations, and options. If you wish to discuss retaining my services, contact me at:

[email protected]

(973)-605-8995

(*Licensed in New Jersey, Maryland, and Dist. of Columbia)

[Disclaimer: The above comments are not intended as nor should they be relied upon as "legal advice", which can only be obtained by personal consultation with a retained attorney; at which time the specific facts and circumstances of your case can be thoroughly evaluated. This reply is provided for general informational and educational purposes only, and does not create an attorney-client relationship with the responding attorney.]

Re: capital gains tax

The sale of a residence in which you have resided for at least 2 of the past 5 years, allows you to eliminate up to the first $250,000 of the gain, as a single taxpayer. You do not give any numbers on your original costs, improvements over the years or the sales price. Thus, it is unknown whether or not you might be subject to the tax. You also do not say how much the new (replacement) house is going to cost. If more than the selling price of your current house, all gain may possibly be eliminated if you elect to use "transferred" basis. These are accounting questions more than legal questions, and you should consult your accountant or a tax attorney. You will need all financial information to get the correct answer. At worst, under current law, any excess profit will only be taxed at a maximum rate of 15%.