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Old 03-08-2009, 10:37 AM
 
3 posts, read 23,232 times
Reputation: 16

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In 2000, my parents "sold" their home (built around 1965) to my sister and me for $1. Our parents lived their until their death. We paid for repairs, upkeep, utilities, improvement, taxes. etc. In September, 2008, we sold the home for $140,000 (each receiving $70,000). How will this effect our taxes. I find lots of info on capital gains on primary residence; this was not our primary residence.
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Old 03-08-2009, 11:17 AM
 
Location: North Beach, MD on the Chesapeake
38,064 posts, read 49,601,615 times
Reputation: 50212
You all need to get an accountant now. The $1 purchase price is going to be a problem. As a non-residence it won't qualify for the $250K capital gains exemption a residence has. You'll probably have to pay CG on your profit $69,999.50. You probably already wrote off the property taxes on your income tax in previous years.
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Old 03-08-2009, 03:22 PM
 
Location: Tijuana Exurbs
4,346 posts, read 11,342,199 times
Reputation: 5753
I agree with NBP that you will need some serious tax preparation assistance.

However, I disagree with NBP's estimate of the Capital Gain subject to taxation. Because the sale from your parents to yourself and your sister was not an "arms-length transaction" between unrelated parties, the $1 purchase price is probably irrelevant in calculating your gain. You may be able to calculate your cost basis as the price your parents paid way back when - not that it will help you very much. If there were any major additions, or rehabilitation projects like an extra bedroom or new kitchen cabinets, the costs of these items could be added to your cost basis.

If you had inherited the property rather than purchasing it, you could have used the stepped up value of the house at the date of your parents death as the cost basis, but since that sale for $1 is on the books, that's not going to work.

Again, you need more help than you'll find on this message board as your issues are difficult and complex.
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