Capital Gains on Residence
My parents filed a quit claim deed to transfer their primary real estate of 40 years to the 2 children as a gift in 2003. Mom & Dad�s cost basis is $100k and the property was valued at $550k in 2003 and is currently appraised at $600k. Mom & Dad have life estate privileges to live on the property until they die.
Mom & Dad are considering moving to an apartment and the children are interested in selling the property. Will there be capital gains due when the property is sold? Can we use Mom & Dad's once in a lifetime $500K primary residence Capital Gains joint exclusion to reduce the capital gains liability? If not, what is the total property appreciation amount subject to capital gains between the 2 children; $450k or $550k?
2 Answers from Attorneys
Re: Capital Gains on Residence
Your basis would be the donor's basis or fair market value, if fair market value were lower. So your basis appears to be the $100,000. Since the residence was given away, your parents do not qualify to use the residence exclusion. Your gain is selling price less your basis. A qualified advisor probably would have recommended doing this quite differently.
Re: Capital Gains on Residence
In order to answer your question i would need to get all these facts and analyze the situation.It is important that you e-mail me your phone # to call you before anyone does anything.It could cost alot if this is not handled correctly.
sincerely,
robert roemer
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