Real Estate Law
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Hi and welcome to JA. Ray here to help you.
You may want to sell the father's house here and pay off your loan.
Your father and his estate may be able to claim the $250,000 exception to capital gains if the estate sells it.The IRS requires that he lived in it 2 out of last five years.Then you return to your rental when lease is up and reoccupy it.You would also qualify for the exception if you have lived in rental for 2 out of the last five years on your taxes.
This process in this order would have you avoiding capital gains here in any form or fashion.Also if you sell the father's house any creditor claims or costs of sale, etc can be deducted in probate prior to distribution.This has the estate paying everything and you splitting that with other heirs through probate.
Overall selling his house, claiming the exemption on his last return, and then you returning to your first home, occupying it for the required time here avoids any capital gains.You can also pay off the lien on it owning it rent free once you pay it off.
This seems like the most sensible way to proceed while avoiding any capital gains.
I appreciate the chance to help you today.Please let me know if you have more follow up.Thanks again.
Thanks again, if you can leave positive rating when we are done it is always much appreciated.
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No can you post it here, thanks