Have a Tax Question? Ask a Tax Expert
Good morning. What you are really talking about is an installment sale where she would report part of the gain in 2010 and then the rest when she collected the rest of the money. The only problem would be is that under the Obama administration, it is projected that capital gain tax rates are going to increase from their present 15%. If this is her home, she is going to be entitled to a big capital gains exclusion from the sale of her personal residence.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping other clients or taking a break.
If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.
If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you.
The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
The real only way is to stop renting it from her so she can claim it as a residence to qualify for the capital gains exclusion. One other way, though probably too complicated for her to grasp, and not for the feint of heart because the IRS could collapse the two transactions into one, would be to buy it for a lesser amount and then make her a separate gift which you could exclude under the lifetime gift credit and would not be income or gain to her.
I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.