U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > New York > New York City
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Old 04-18-2012, 05:58 PM
Location: Denver, CO
898 posts, read 935,733 times
Reputation: 1361


Hello everyone,

I got a unique opportunity to take over a mortgage for my FIL's home.

Here's the statistics:
Staten Island New York Homes for Sale & Staten Island Real Estate - Zillow
The house was purchased for $130k in June 2003.
The house was renovated inside and out.

It's a small bungalow type house.

Since they refinanced profusely and took out a bunch of home equity loans they ended up owing a lot of money which they since paid off.

Now, they want to transfer the house to us for whatever is left on the mortgage - $200k.

I'm debating if this is good idea or not. As most of you know rents are extremely high in NYC and as a software developer working in NYC I have to live nearby.

Now, on the one hand this is a good idea because I'll be getting it for significantly less (and the FIL is willing to take on the hit of gifting the house at less than market value on his taxes), I'll be owning my own home (have large dogs so its difficult to find an apartment in NYC), and as I said it's fully redone and ready to go.

My main concern is sellability.

I don't know how to predict if a house will be sellable.

I used Capital Gains Tax Rate Calculator to calculate the capital gains tax and realized that I need to sell it for $220k when I'm ready to move out (in 4-6 years) in order to be able to afford the capital appreciation (since It was gifted to us we would need to pay capital gains based on original purchase price of $130k).

Now, they haven't been able to sell it with an asking price as low as 250k.

So I'm confused, and ambivalent, and would love some advice from the more knowledgeable people on this forum.

Reply With Quote Quick reply to this message

Old 04-18-2012, 10:46 PM
9,339 posts, read 13,886,011 times
Reputation: 9406
A few things don't make sense. First, if you're paying off or assuming the mortgage, the basis value shouldn't be zero, it should be the amount you paid off. Your FIL still has to report the difference between the mortgage and the home's market value as a gift, however. If it was a straight out gift, your basis would be their adjusted basis, $130,000 plus the cost of improvements.

Second, if you use it as your primary residence for 2 years, you don't have to pay capital gains tax when you sell it in any case.
Reply With Quote Quick reply to this message
Old 04-20-2012, 08:03 AM
Location: Brooklyn, NY
1,271 posts, read 2,559,162 times
Reputation: 811
That's not how taxable exchanges work. If you're assuming someone else's $200k mortgage, you are deemed to have paid $200k for the house, and would be taxed only on appreciation beyond that amount upon disposition (which makes perfect sense--assuming a liability is the same as paying that amount in cash). It's not a tax gift, and your father-in-law (that's what you mean by FIL, right?) will have to pay taxes on any appreciation he's already experienced ($70k) if it's not his residence (see below).

Regardless, this is likely to be an ordinary asset rather than a capital asset because it will be your primary place of residence. Capital assets are (primarily) assets held for the production of income, which do not include your primary residence or any other residential buildings that you're not renting out to other people. That would be bad news because ordinary rates are higher than capital rates. However, there's a tax exemption for sales of your primary residence up to $500k of appreciation, so you wouldn't pay any tax on the sale of the home even if you had a basis in the home of $130k or even $0 (which you don't; you will have a cost basis of the amount of the mortgage liability assumed) unless it was worth more than $630k (/$500k) on disposition, and even then only on the amount beyond $500k of appreciation.

Finally, I seriously doubt it would be a good idea to purchase a home as opposed to renting one in your situation, especially as you're having trouble grasping the basics of the situation. Do you know New York City well? You know how awful and long the commute from Staten Island is, right? Have you explored options other than this one? It doesn't really sound like you're being done any favors here.

Last edited by BrownstoneNY; 04-20-2012 at 08:13 AM..
Reply With Quote Quick reply to this message
Old 07-12-2012, 07:51 AM
Location: Manhattan
20,182 posts, read 26,493,095 times
Reputation: 9054
Good luck with "genuine and God fearing license property/real Estate agent."
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.

Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > New York > New York City
Similar Threads
View detailed profiles of:
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top