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Old 12-29-2017, 09:40 AM
 
10,567 posts, read 5,584,638 times
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Quote:
Originally Posted by Larry Siegel View Post
My mother sold me her condo for above market price when she was quite old.

I then got to take a capital loss deduction when I sold the condo at market price after she passed away. Meanwhile she got my money, which she needed to live. What was left, I inherited.

I am not a tax professional or a lawyer but this worked for me.
The loss that you describe would generally not be deductible. What special circumstances were there that made this a deductible loss?
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Old 12-29-2017, 11:56 AM
 
15,304 posts, read 7,341,666 times
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Quote:
Originally Posted by TaxPhd View Post
The loss that you describe would generally not be deductible. What special circumstances were there that made this a deductible loss?
He bought the house as an investor. Any loss would have potentially been subject to the passive activity limitations, though, which can make a difference.
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Old 12-29-2017, 12:05 PM
 
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Quote:
Originally Posted by WRM20 View Post
He bought the house as an investor. Any loss would have potentially been subject to the passive activity limitations, though, which can make a difference.
It doesn’t appear that the house was a rental, and paying more than fmv would make it difficult to claim that the house was purchased with the intent to generate cap gain upon its final disposition.

The rules on disallowance of losses on personal use assets are in place precisely to deal with this kind of situation.
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Old 12-29-2017, 12:25 PM
 
106,254 posts, read 108,257,613 times
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Quote:
Originally Posted by TaxPhd View Post
The loss that you describe would generally not be deductible. What special circumstances were there that made this a deductible loss?
i guess he could claim he was selling it as an investment but that is stretching it , but it still makes no sense if he is not committing tax fraud and not actually paying his mom more than market .
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Old 12-29-2017, 12:30 PM
 
6,438 posts, read 6,894,163 times
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The loss was tiny (about $6000) and I didn't know the transfer price was above market until I went to sell it. My asking price was well above the transfer price. Of course I would have preferred to make money on it.

The deduction was limited to $3000 in any one year because of passive activity limitation.
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Old 12-29-2017, 12:39 PM
 
106,254 posts, read 108,257,613 times
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it is really pushing things trying to claim it as an investment property . if they don't pick up on it you are lucky . you really need some way of proving it wasn't personal .
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Old 12-29-2017, 01:09 PM
 
Location: Raleigh
8,168 posts, read 8,494,576 times
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Quote:
Originally Posted by westcoastforme View Post
This is just a "in theory" situation. Lots to think about. Thanks for the replies. Say someone wins the lottery.....say take home after taxes lump sum would be about 7 million. He could give the ticket to his parents<>
Thoughts?
[sarc]I've given this a lot of thought this weekend because I apparently expect to win Powerball and Mega Millions this weekend; total annuity value about $700 million. [/sarc]
They have video of the actual transaction at the POS and they know who bought it. They know if you've been good or bad, so be good for goodness sake. Any such scheme is a quick way to be declared a fraud and a way to lose the prize.
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Old 12-29-2017, 01:35 PM
 
106,254 posts, read 108,257,613 times
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according to what i see on nolo in order to take the loss on the sale is if the house was a rental first . gains can be taken on properties bought for flipping . you would need to show you sold one property that was an investment property , sold it and replaced it with this if you want to deduct a loss without it being a rental .


The only way you can obtain a deduction if you sell your home at a loss , is to convert it to a rental property before you sell it. However, your deductible loss will be limited. This is because when you convert property you held for personal use to rental use your tax basis (value for tax purposes) is the lesser of the following values on the date of the conversion:
the property’s fair market value, or
the property's tax basis.
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Old 12-29-2017, 02:00 PM
 
Location: Paranoid State
13,044 posts, read 13,828,187 times
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Quote:
Originally Posted by GeoffD View Post
Not really.
And yet in the eyes of the IRS it is true -- which is why QPRTs exist in the first place.

Think about it this way. Let's say there are two identical houses right next to each other. Let's say they both are for sale as rental properties.

Let's say the first house, house "A" has a tenant is paying the fair market rental rate, and has 3 months left on his lease.

Let's say the second house, house "B", has a tenant who is paying a nominal amount per year (well below the fair market rental rate) and is just at the beginning of a 25 year lease with no provision to increase the rental amount until the end of the 25 year lease.

As an investor, would you value house "A" differently than house "B"? Of course you would. The difference is the encumbrance on house B. And that encumbrance figures into the value of gifting house B to an heir.
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Old 12-29-2017, 02:17 PM
 
24,544 posts, read 18,124,000 times
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Quote:
Originally Posted by SportyandMisty View Post
And yet in the eyes of the IRS it is true -- which is why QPRTs exist in the first place.

Think about it this way. Let's say there are two identical houses right next to each other. Let's say they both are for sale as rental properties.

Let's say the first house, house "A" has a tenant is paying the fair market rental rate, and has 3 months left on his lease.

Let's say the second house, house "B", has a tenant who is paying a nominal amount per year (well below the fair market rental rate) and is just at the beginning of a 25 year lease with no provision to increase the rental amount until the end of the 25 year lease.

As an investor, would you value house "A" differently than house "B"? Of course you would. The difference is the encumbrance on house B. And that encumbrance figures into the value of gifting house B to an heir.
That's not a real world example in my universe. Leases are 1 year, not 25 years. You can get anyone to move out of income property if you give them enough financial incentive. I don't live in the land of rent control so I can spike any lease to market rate the nanosecond that 1 year lease is up. I also live in a universe where tenant law is different for owner-occupied multi dwelling units. You can evict anybody if you live in the building.
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