Capital Gains and Losses

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I live in San Antonio TX. I was added to the Deed of an

elderly friends home in order...
I live in San Antonio TX. I was added to the Deed of an elderly friends home in order to renovate and sell. My wife and I did just that in 2 months. We did not buy the house and spent our own money to renovate. We are collecting part of the profit from the sell. I am disabled and cannot work. My wife is employed. Should the proceeds be given to my wife only and how do I report this on my taxes?
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11/16/2017
TaxRobin
TaxRobin, Tax Preparer
Category: Capital Gains and Losses
Satisfied Customers: 15,967
Experience: 15+ years in Tax preparartion as well as Instructor for tax law, theory, and application
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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Because you were added to the deed prior to sale you are also an owner and must report the sale (your % of the sale based on ownership%) on form 8949 and Schedule D.

Your basis is the % of the original cost that your friend had and your costs paid to make improvements.

If you receive more in the sale then your cost you will pay tax on that gain.

When your friend put you on the deed they gifted you a part of the ownership. That means you cannot have the proceeds made to your spouse unless she is also an owner.

Please let me know if you need more information.
If not then scroll up to see the STARS to rate so I am credited.

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Customer reply replied 26 days ago
We have an agreement with the owner that we would pay her $90,000 upon sell of the home. There are 4 people added to the deed: My wife and I, and another couple. After closing and renovation costs, the profit is about $9,000 per couple.
Would I use $90,000 as the original cost and does it matter if the proceeds go to just my wife or both of us on our part of the proceeds?

You must use the amount that the original owner had as their cost split 5 ways. To that you can add your costs that you paid to improve

It does not matter if the proceeds go to you are your spouse you both are owners and would need to report.

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You cannot use the $90,000 unless the deed or contract shows you paid $90000 for the portion.

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Customer reply replied 26 days ago
Perfect, and thank you. I also plan to reinvest the money in another house in 3 months. Do I show that on my taxes as well?

No that would not be reported and has no bearing on this sale. Should you sale that investment then you report.

You are most welcome.
A positive 5 star rating is appreciated so I am credited for assisting. Thank you in advance

TaxRobin
TaxRobin, Tax Preparer
Category: Capital Gains and Losses
Satisfied Customers: 15,967
Experience: 15+ years in Tax preparartion as well as Instructor for tax law, theory, and application
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