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My parents co-sign for me to buy my first home; hence their names are on my home's title too. Now, my parents want to withdraw their names from the title so I can have 100% ownership. If I sell this home, do I have to pay capital gain tax on 2/3 of the profits even if my parents are no longer on the title of this home? My parents are currently living in their primary residence so this home of mine is considered as their "investment". I live in California. Thanks for any input.
My parents co-sign for me to buy my first home; hence their names are on my home's title too. Now, my parents want to withdraw their names from the title so I can have 100% ownership. If I sell this home, do I have to pay capital gain tax on 2/3 of the profits even if my parents are no longer on the title of this home? My parents are currently living in their primary residence so this home of mine is considered as their "investment". I live in California. Thanks for any input.
It's more complicated than simply capital gains when you sell this property. There's an issue of gift tax if they " withdraw" their names from the title to GIVE you 100% ownership. That's a gift and may very well be taxable
There are ways of legally avoiding or offsetting gift tax. You need to find a competent CPA to review this and find the best approach that keeps ALL taxes minimal while still accomplishing the goals of you and your family.
The CPA may recommend you confer with an attorney as well
It's more complicated than simply capital gains when you sell this property. There's an issue of gift tax if they " withdraw" their names from the title to GIVE you 100% ownership. That's a gift and may very well be taxable
There are ways of legally avoiding or offsetting gift tax. You need to find a competent CPA to review this and find the best approach that keeps ALL taxes minimal while still accomplishing the goals of you and your family.
The CPA may recommend you confer with an attorney as well
Oh, I see. Even if my parents file the quit claim deed it will trigger the gift tax thing. At best we can avoid just $28k of capital gain exclusion by filing the quit claim deed.
Oh, I see. Even if my parents file the quit claim deed it will trigger the gift tax thing. At best we can avoid just $28k of capital gain exclusion by filing the quit claim deed.
I have no idea what your second sentence means. Seriously - speak to a CPA about all of this. Before anyone signs a quit claim deed, they should cover their butt and speak to an attorney. This is all more complicated AND MORE IMPORTANT than you realize.
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