NJ Real Estate Tax Question (mortgage, home, income)

[llckll]

Hello,

I purchased my home from my in-laws. The home was appraised at $480,000 and their remaining balance on their mortgage was $320,000. They gave my wife and I the equity as a gift of equity for our down payment ($160,000).

When we sell the house, do we have to pay any additional taxes on the equity amount we receive?

[Bill Keegan]

Originally Posted by llckll

Hello,

I purchased my home from my in-laws. The home was appraised at $480,000 and their remaining balance on their mortgage was $320,000. They gave my wife and I the equity as a gift of equity for our down payment ($160,000).

When we sell the house, do we have to pay any additional taxes on the equity amount we receive?

When you sell the house, you will be taxed on the gain in value from the time you became the owner until the time you sell it.

The potential tax hit is NOW, when you become the owner. Essentially, your in-laws just gifted you the $160,000. The government may claim some right to part of that via taxes. If I were you, I'd contact a tax professional to ask the question, as the answer can vary depending on your personal circumstances.

[Goldendoodle1969]

Talk to an accountant.

[MiamiLIFE]

Originally Posted by Bill Keegan

When you sell the house, you will be taxed on the gain in value from the time you became the owner until the time you sell it.

The potential tax hit is NOW, when you become the owner. Essentially, your in-laws just gifted you the $160,000. The government may claim some right to part of that via taxes. If I were you, I'd contact a tax professional to ask the question, as the answer can vary depending on your personal circumstances.

Exactly. The "gifted" equity is considered income and will be taxed. You will need to disclose when you prepare your tax return that you recieved a "gift" from you inlaws. The gov't wants its taxes and it will get it.

[Fox Terrier]

Originally Posted by Bill Keegan

When you sell the house, you will be taxed on the gain in value from the time you became the owner until the time you sell it.

The potential tax hit is NOW, when you become the owner. Essentially, your in-laws just gifted you the $160,000. The government may claim some right to part of that via taxes. If I were you, I'd contact a tax professional to ask the question, as the answer can vary depending on your personal circumstances.

But if the gain is $250,000 or less, no taxes are due.

[Bill Keegan]

Originally Posted by Fox Terrier

But if the gain is $250,000 or less, no taxes are due.

That's at time of sale. Right now, the "gift" may be taxable. Talk to a local tax professional.

[manderly6]

Just remember, you get what you pay for. I would not leave this up to an internet forum. And certainly not one dedicated to New Jersey as opposed to taxes and finance.

[bbnetworking]

anyone can gift someone else $1 million dollars in a life time, anything over that will be taxed, under that, the answer is no, you do need to report it, so $160,000 will be subtract from $1 million dollars.

Anyone can gift anyone else $12000 per year without reporting.

[sonofagunk]

Originally Posted by bbnetworking

anyone can gift someone else $1 million dollars in a life time, anything over that will be taxed, under that, the answer is no, you do need to report it, so $160,000 will be subtract from $1 million dollars.

Anyone can gift anyone else $12000 per year without reporting.

yea, no taxes, your in-laws just have to fill out the correct form on thier taxes, gift taxes are paid by the GIVER. They just have to fill out the form to make sure they do not go over a lifetime total.

but it all matters how the transaction was done. You might have the case where you just paid $320K for the house. It matters how it is registered.