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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 116756
Experience:  Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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Are there Capital Gains taxes to pay person (mom) who is:

Customer Question

Are there Capital Gains taxes to pay for a person (mom) who is:
Part (50%) ownership in a residential property, but not lived in the home for over 20 years, IF when the home is sold, all proceeds go back into new residential property in both the person(mom) and daughter's name.
*part ownership was conveyed to daughter who lives there.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Law Educator, Esq. replied 1 year ago.

Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

If all proceeds are used for a new residence, then no capital gains taxes would be due. Also, there is a one time capital gains exception for the first time a person sells their home which would apply to both owners. In addition, mom could avoid this by doing a quit claim deed to daughter if daughter qualifies for the first time sale exception and mom would not have any capital gains either. So, yes, mom could avoid capital gains on an issue like you are describing.

Customer: replied 1 year ago.
Mom as already sold a prior home, to buy this one, that she is not living in. Daughter has already sold 2 prior homes. So, no Capital Gains since all proceeds are going back into property. Is there a time limit for the proceeds to roll-into the new home? 45 days, 6 months, 2 years?
Customer: replied 1 year ago.
Re-stated: SInce they both have already sold homes, will there now be Capital Gains? Mom's principle residence is FL. Daughter lives in MA.
Customer: replied 1 year ago.
I need to log out. Will you confirm the answer please, that even though these are not first time sales, there is no Cap Gains and if there is a time limit on rolling money toward new purchase. Thank you.
Expert:  Law Educator, Esq. replied 1 year ago.

Thank you for your reply. Sorry from the delay, I am actually 6 hours earlier than your time right now as I am out of town on a client matter and as such I am working with multiple customers at one time. I appreciate your patience.

The first $250,000 in profit is excluded from capital gains. So unless they plan on making a fortune on this sale, the likelihood of having a capital gain tax here is going to be slim anyhow. See:

Customer: replied 1 year ago.
After reviewing your reply last night, I spoke with a Tax Accountant, CPA this morning. He informed me Mom would be in danger of paying Cap Gains, because she has not lived in the home, for over 20 yrs, and, if her taxable income is above the current ceiling. (The main Exculsion for Cap Gains is seller must have lived 2 of last 5 yrs in home. He said this was established over 10yrs ago by Feds.)
Sorry but that conflicts with your reply.
Customer: replied 1 year ago.
Thanks for giving my question a reply. The living in home was significant piece that I saw on the web, but could not confirm with IRS, which is why I contacted you/JustAnswer. The ceiling of income was also not easily found, why I followed up with a CPA / PC. I will probably request a refund in the next week.
Expert:  Law Educator, Esq. replied 1 year ago.

Thank you for your reply.

I also told you that your mom can get off of the deed by a quit claim to your sister and this way she would not face that tax. I also provided you the link that also explains she can reestablish herself in the premises. So you have options available. But no need to wait until next week to get a refund, why don't you go to TODAY and ask customer service to refund your money to you and they will do so.

Customer: replied 1 year ago.
I was aware the other 50% of the property could be conveyed to reduce Capital Gains, why I didn't ask that. That conveyance would have had to happen 2 yrs prior to the sale, from what I understand. It was the current scenario I needed direct reply for, and as is, Cap gains would apply depending on the Taxable Income.I appreciate your replies. It is only $36, so I may not take time to request a refund. Thanks for making this service available.
Customer: replied 1 year ago.
Need to logout now...
Expert:  Law Educator, Esq. replied 1 year ago.

Thank you for your reply. If you do not request a refund or do not leave positive feedback for the expert, the site simply keeps your money (and you do not want that either). So please make the choice and leave positive (3-5 stars) feedback or you should ask for a refund and not let the site keep your funds (experts are not employees of this site so we get nothing for spending time with customers unless customers leave positive feedback).

Cap gains "could" apply, depending on the amount of the profits from the sale once you add in all major repairs to increase basis and all costs of sale etc and a good accountant can minimize those.

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