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J. Warren
J. Warren, Attorney
Category: Estate Law
Satisfied Customers: 2211
Experience:  Experience in estate planning including wills, trusts and succession planning.
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If I sell my home and buy another with my daughter and do

Customer Question

If I sell my home and buy another with my daughter and do not put my name on the title, what are the tax consequences?
Submitted: 9 months ago.
Category: Estate Law
Expert:  J. Warren replied 9 months ago.

Hello and welcome to JustAnswer. Please note:This is general information for educational purposes only and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. By continuing, you confirm that you understand and agree to these terms.

There would be potential capital gain taxes and possible gift tax implications as well. Let me explain: First, here is the rule for gain on the sale of a house: "For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months." see: See the following passage California's FTB Publication 1001 at: https://www.ftb.ca.gov/forms/2013/13_1001.pdf

So if your gain (that is the net proceeds of the sale minus the original cost plus capital improvements) is more then the exempt amount, the amount over the exemption is subject to capital gain tax.

If you help a daughter purchase a new house and do not hold an interest in the property ( that is you are not on title), the IRS may treat this a gift and therefore would count against a person's lifetime exemption of giving away 5.45 million before the gift is taxed. A person may give away $5.45 million over the span of their lifetime and there is no gift tax owed. Beyond this amount the person giving the gift must pay gift taxes. Until the amount of gifts reach $5.45 then there is no tax gift liability. So for example if you buy a house worth $450,000 and do not become the owner but buy it for your daughter, the IRS could argue that you made a gift in the amount of $450,000 and therefore only have 5 million to gift during your lifetime before a tax would kick in. (Any amounts gifted to a single person in the amount over $14,000 is required to be reported on a gift tax return even if no taxes are due).

There is currently no California gift tax.

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Please be aware that the information provided here is not legal advice. Rather it is simply general information. All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you.

Expert:  J. Warren replied 9 months ago.

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