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Hello, You had answered a question about my widowed sister

gifting us money to purchase...
Hello, You had answered a question about my widowed sister gifting us money to purchase the the house. Unfortunately, things didn't work out so we're going to sell the home. I have 3 questions for you.

1. I don't want to assume, if I sell the house, can I regift her the money back w/out any tax penalties. The amount will be 170,000.00 at the most.

2. We've lived in our 2nd home in California for hopefully for only 10-14 months (my wife will be moving back after 9 months). We still own our home in Wisconsin and we're both moving back after the house sells in CA. My wife's employer in Wisconsin will be hiring her back. Can we exclude any of the capital gains on the sale of the 2nd home because she is taking a job out of state.

3. A friend has been living at our WI house since we moved out and has been paying the utilities that he's using and paying $350 and about $650 in total a month. Do I have to declare this as income because I really don't want to have to figure out depreciation and expenses on my primary home (based on 2 out of 5 years) if I don't have to.

Thanks for your help (again),
Bill Gayk
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Answered in 23 minutes by:
9/3/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

1) When you sell the house, you will pay tax on the gain that exceeds the purchase price of your home. If you gift the proceeds, there's no tax implications of the gift, although you may still owe tax on the sale.

2) Since you are moving out of state for work, you can exclude a portion of the sale - take the total months you are there, divide by 24 and multiply that by $500,000. That's your maximum exclusion. Gains below that amount are tax free.

3) If you are renting below market rent, you claim the income you receive from him as other income on line 21 and deduct your expenses up to the amount of rent on schedule A.

Please let me know if you need anything additional. If not, please rate my response as Excellent so that I may receive credit for assisting you today.

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Verified
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Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer
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Megan C
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16,581
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Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

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