Re: Sell home to minimize capital gains tax - Posted by seller
Posted by seller on July 27, 2005 at 14:49:29:
The seller - also called the owner - is the one who actually owns the home, not the one who is paying the mortgage or helping out with the sale.
The owner(s) is whoever is named on the Title, not on the mortgage papers. Anybody not on the Title but who is helping pay the mortgage is not officially an owner and has no claim on the property unless there is a separate agreement of some sort in the form of a lien.
It is the seller/owner who must pay capital gains taxes if applicable when the house is sold.
It is the seller/owner who must live in the home for two of five years prior to sale to avoid paying capital gains taxes.
If only your in-laws have their names on the Title they own the house even if you have helped them pay the mortgage for 11 years. If they sell their home to you, they will not need to pay capital gains taxes (unless the home is worth a small fortune) if they have lived there for the last 11 years - or at least 2 years of the 5 years before sale. The price you pay to them for the house will become the “base price” upon which you will base your future appreciation gains and your capital gains taxes upon when you sell the home some time in the future as you will have your name on the Title and be the owner/seller.