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Ask Law Educator, Esq. Your Own Question
Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 118789
Experience:  Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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IRS responsibility for: Sale of home which had a 50/50 ownership.

Customer Question

IRS responsibility for: Sale of home which had a 50/50 ownership. One member age 92 with life estate moved into managed care. The remainman sold the property and split the proceeds (50/50) with the other owner. The revenue on the split is just over $100,000 each. Do I have to pay Capital Gains Tax? I am 77 years old and unemployed
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.
Both owners on the 50/50 ownership have to pay capital gains tax on the proceeds from the sale, if the property was sold for more than the value of the property at the time the owners first received it. Capital gains tax must be paid on the increase in value of the home. So this means on the date you received ownership, the home had a value called the tax basis and to that the cost of any major repairs or renovations would be added to get the total tax basis of the home. If you sell the home for more than that amount, then the difference is what you have to pay capital gains tax on.