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Ray
Ray, Lawyer
Category: Real Estate Law
Satisfied Customers: 40678
Experience:  Texas Attorney for 30 years dealing in real estate
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My husband and I have been leasing out our home in order to

Customer Question

My husband and I have been leasing out our home in order to move in the home with my father and care for him for the last four years. The lease is currently supposed to end in June. Daddy recently passed away. I am the Executor of the Estate. Daddy's clear title home is worth approx. $120K and, according to the Will, is now supposed to be split between my sister and me. Would it be best for my husband and I to buy my sister's half of the home from her and continue to live in Daddy's home or to sell the home and use our portion to pay off our current mortgage (approx. $52K)? Our home market value is approx. $200K. We plan to move to another city within five years so we want to know which way would be best for us regarding taxes and closing costs, etc. Both homes are equally rentable. The home we own is currently being leased out for $1600/mo. Daddy's home would probably rent for $1,000/month but may need more maintenance than our home. My husband and I are both in our 60's. Thank you.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Ray replied 1 year ago.

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.

Expert:  Ray replied 1 year ago.

Reference

http://charliedunn.com/_Sellers_Tips/Capital_Gains_Exclusion_for_Homesellers.htm

I appreciate the chance to help you today.Please let me know if you have more follow up.Thanks again.

Expert:  Ray replied 1 year ago.

Thanks again, if you can leave positive rating when we are done it is always much appreciated.

Customer: replied 1 year ago.

Did you get my reply?

Expert:  Ray replied 1 year ago.

No can you post it here, thanks

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