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If my parents sell me their home for what they owe and gift…

If my parents sell...

If my parents sell me their home for what they owe and gift me equatity...will either party have to pay capitol gains?

Lawyer's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

Colorado

Lawyer's Assistant: Has any paperwork been filed?

No

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

No. I don't think so

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Answered in 9 minutes by:
3/13/2018
P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
Satisfied Customers: 37,490
Experience: 12+ yrs. of experience including real estate law.
Verified

Thanks for the chance to help. I am an attorney with over 12 years experience. Hopefully I can help you with your legal question.

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Can you tell me, how much is the equity?

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Customer reply replied 4 months ago
We think about 150,000

THanks...a few mins please as I type an answer.

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THank you for your patience

There are two separate issues here

For capitol gains, if the money they receive from the sale is less than or equal to their "basis" (the amount they paid)? THen there is no capitol gain. I understand that the plan is to have you pay less than market value...that is fine...but if the sale price is higher than what they paid, there could be a capitol gain. There is an exemption for sale of their personal residence...so if they live in the home, and are selling to you? There will not be a capitol gains tax associated with the sale

That said, there WILL be a "gift tax"

The federal gift tax exemption is $15K/person. So your parents could give you $15K each (that would allow them to exempt $30K). And if you have a spouse and she is a recipient of the gift? Then you can exempt up to $60K. But the reminder is taxable as a gift, to the donor (to your parents).

To avoid the gift tax? Consider creating a trust...by creating a trust, and making you the beneficiary, you avoid the gift tax

Please let me know if you have more questions. I am happy to help if I can. Otherwise, please rate the answer so I may get credit for my work.

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Customer reply replied 4 months ago
will I be liable for the gift tax...or my parents?

The donor is liable for the tax. If your parents want to avoid the tax, they can create a trust.

Please let me know if you have more questions. I am happy to help if I can. Otherwise, please rate the answer so I may get credit for my work.

P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
Satisfied Customers: 37,490
Experience: 12+ yrs. of experience including real estate law.
Verified
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Thank you for taking the time to accept the answer, I truly appreciate that
phil

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