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Old Today, 04:24 PM
 
1 posts
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Located in Ohio. My son and another relative purchased 50 acres of vacant land as joint owners January 2012 for $83,500, the joint owner passed away November 2012 and my son then became sole survivor owner.
My son then transferred this vacant 50 acres to me (his mother) at no cost in August 2016 and I added my father to the deed as joint owner the same day (there are two deed transfers of ownership on record (1st) from my son to only my name then (2nd) from my name to my name and my father jointly.
This vacant property is now being sold for $60,000 in 2019.
My father is on social security income only and has not had to file income tax for several years, my annual income is $12,000-$15,000, Okay now the question is would we be responsible for capital gains tax and how is it calculated? Thanks for any help
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Old Today, 04:29 PM
 
Location: Raleigh NC
8,424 posts, read 6,616,497 times
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you're telling us the sale price today (60K) is less than the purchase price 7 years ago?

there is no gain to be taxed.

so your capital gains are $0.

Unless your son took a capital loss of $83,500 when he transferred to you, and truly reduced your cost basis to $0. Then your own gain would be on the net after expenses on the $60K.

But since you used attorneys for all these deed swaps, I'd start with that attorney, and your tax advisor, or the one they recommend you to use.
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Old Today, 06:40 PM
 
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Capital gains tax is calculated based upon the profit--not upon the selling price. Although the exact basis may be somewhat in question, it is practically certain that you will not have a profit on this sale; hence, no capital gains tax. (When your son gifted the property to you in 2016, you assumed his basis in the property--and he would have received a partial stepped-up basis in Nov. 2012.)

My question to you, however: are you sure that the property is only worth $60,000? That seems unusual that it is worth less than it was in 2012. You may want to contact some real estate professionals--those who work with land-- to see what they think the property is worth. If you can sell the property on your own, that's a plus...but an agent may be able to secure a better price for you. That's something that needs to be taken into consideration.

Of course, if you're already under contract it's too late to review your options.
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