Have a Tax Question? Ask a Tax Expert
Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.
How did you acquire the house & how much did you pay for it?
When did you move back to West Virginia?
What was your husband's date of death & how much do you think the house was worth then? More than you can sell it for now?
It was my husbands when we married 18 years ago. 3 years ago after my strokes June 21, 2007 at the time the property was worth about $65000 but due to break ins and neglect my realtor has it listed for $59000
Did you make any major improvements to the property? Where did the mortgage come from?
We moved from the single wide trailor to a 3 br/2ba United bilt Home . thats where the mtg. came from.
What was the actual approximate date that you moved away from AR?
Sept 1 2008
So do you mean your husband had the single wide trailer when you got married & then you moved to the 3 b/r 2 ba home? When you did that you sold the trailer, took out a mortgage & bought the home together? if so how much was the home ie. what did it cost?
The single wide is still there, he lived in it when we were married. The mtg. is still in both names. $59,000
Are you saying the ranch cost $59,000.?
The land was a gift to him 25 years ago from his father---19+ acres single wide , house, 10 horse barn, 8 acre pasture, 11 wooded and a large pond. BUT sales are terrible in AR.
The old residence replacement rules have been repealed. So that leaves you with trying to qualify for the new exclusion or even better (for income tax purposes) to have no gain on the sale;
So you're trying to sell all that for $50,000. Is that right?
What was done with the mortgage money or was the mortgage on the property when it was gifted to him?
I'd love 55 but I don"t expect it
The house and 5 acres was the mtg.
They used 5 acres as collateral
The property was free and clear when we built the house
The general rule for the personal residence exclusion is that (in your case) if you owned and lived in the premises for 2 out of the last 5 years, ending on the date of sale, you can exclude up to $250,000. of gain from taxable income. So, for example, if you sell the property by September 1, 2012; the five years are the years ending 2008, 2009, 2010, 2011, 2012 & you have only occcupied the property as your principal residence for 1 out of the preceeding 5 years. That doesn't qualify for the exclusion.
Where are you living now?
So why I am asking all these questions is to try & determine if you have any taxable gain at all in the first place.
WV in a rental
How much was the mortgage orginally that you used to build the house?
OK, so you spent 59,000 just to build the house. That means you have no gain to worry anout.
Technically, 1/2 of the house would get its tax basis from 50% of the Fair market value at your husband's date of death, or 1/2 of let's say 60,000. is 30,000. The other half would come from your tax basis for your 50% of the house which would go back to the original cost + improvements or if it was only 59,000. then 1/2 of that is $29,500. so your total tax basis is $59,500. & you actually have a loss on the sale.
So you don't need to worry about qualifying for the residence exclusion.
I know but I have to do something. Rent here is 700 house payment there is 400 my income is only 1900 and the boys and I are drownding.
Sure. i understand. It has nothing to do with keeping the property. When you sell it you have no taxes to pay & that was your original question.
Thank you again. CCM
I'd think twice about giving anyone any money in your circumstances; you need all the reserves you can muster; if after a year or so you feel you can do something, then go ahead, perhaps in a smaller amount & then add to it in another year if you can afford it.
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