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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 118192
Experience:  Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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My mother owns a house in Arizona. She uses it as a second

Customer Question

My mother owns a house in Arizona. She uses it as a second home. I live in it, pay all the bills and listed on a beneficiary deed.
If she would sell it, would she have to pay capital gains? If not, are they any taxes to pay if she gifts us the equity gain?
Submitted: 1 year ago.
Category: Real Estate Law
Customer: replied 1 year ago.
I don;t know why that came up. It's not New Zealand 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 she sells it for more money than she paid on the property she would have to pay capital gains tax on that additional money over what her initial investment (plus major repairs/renovations over the years) IF she has not sold a home before and used her one time exemption. There is also a one time home sale capital gains tax for a home sale of up to $150,000 for single and up to $250,000 for married. See:
If she dies owning the house and it goes to you, the you get a higher basis to avoid capital gains, because you get the value of the house at the time of her death, not the value of the house at the time of her death.
Similarly, if she gifts you the whole house now, you get the tax basis of the current value of the house now, so if you sell it it is less likely you would have to pay any capital gains tax.
However, if she has never used her one time capital gains home sale exemption, then chances are she would not have to pay any capital gains tax or minimal tax.