Capital gains question - Posted by Tim (CT)

Posted by Tim (CT) on July 02, 2003 at 11:03:51:

Hi Marcos!! How have you been? Hope things are great with you.

Thanks for the reply. Ya, I’ve read the statement ‘…you must live in the property 2 out of the last 5 years…’ but I haven’t heard anything about ownership. Do you also have to own it for 2 years or just live in it? Are there family exemptions? I have a call into my CPA. But, just trying to get some initial feedback on the subject.

Another thing: I (and my brother) have owned this property for the last 8 years or so. My parents have lived there for the full duration. So, if I do have to pay capital gains, it should be long term gains (Max 20% I’ve heard). Also, we’ve never taken a tax deduction for this property since we’ve owned it. I (until I started educating myself about real estate) never thought about it. This is something I want to speak with my CPA about. I want to find out what it would take to file a modified tax return from previous years.

Thanks again.

Capital gains question - Posted by Tim (CT)

Posted by Tim (CT) on July 02, 2003 at 10:46:17:

I have a property that I own in which my parents live in. We want to sell it but it’s my understanding that I would be subject to capital gains tax because I don’t live there. If my parents owned it and sold it, then they wouldn’t be subject to capital gains tax (the sales price is about 110k) because it’s owner-occupied (personal residence). Can I quit-claim the house over to them, have them live in it for a short while (6 months) and then sell it? It would then be sold under their name. Would this work? Do I need to wait the 6 months? Does it need to be longer?


Re: Capital gains question - Posted by GL - ON

Posted by GL - ON on July 02, 2003 at 12:38:00:

I have heard that if a close relative occupies the house it is considered the same as owner occupied for tax purposes.

I don’t know if it is the same where you are. You might want to ask a good accountant or call up the tax people if you don’t get a definite answer here.

Re: Capital gains question - Posted by Marcos

Posted by Marcos on July 02, 2003 at 10:53:47:

You can’t avoid capital gains unless you live in a property for two years. Now, under certain circumstances as I understand it, you can prorate this capital gains exemption. Ie, you get a new job, you move 50 miles away or more, etc. But, for the most part, you need to own the property and occupy it for two years to get the capital gains exclusion.



P.S.- Hope all is going well with you buddy.