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My mom and I own a condo in Florida. What are the tax implications

when we sell. We bought...
My mom and I own a condo in Florida. What are the tax implications when we sell. We bought at $125,000. And will be selling at $250,000. As well if we sell this and purchase another condo would it be wiser to put my 4 daughters down as owners as well so we stay away from hefty taxes when my mom and I pass? Thank you.
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Answered in 2 minutes by:
8/3/2011
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,209
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Robin D :

Hello and thank you for using Just Answer
Depending on wht the condo was used for needs to be looked at but if this was a vacation property for you then you will each show a sale in relation to your ownership percentage.

Robin D :

You are not allowed to exclude if it was not your main home.

Robin D :

You will split the gain of $125000 and show the sale on Schedule D for each of you with your returns.

Robin D :

The Capital Gain will be less if you held the property for longer than 1 year.

Customer: What % will we be each paying on the difference? Is it better to put the new aguisition under 6 names
Robin D :

Your rate will be 10% or 15% it will be determined by your total income form all earnings in the year of sale.

Customer: We held the property for 20 years? I was told that Canadians had to pay another tax (foreign?) Is that true. Thanks Robin
Robin D :

As far as adding the children now that would not be a good aidea. When they inherit they will be able to use the step up in basis and that could mean that they would have no gain at all depending on fair market value when they inherit

Customer: This is a vacation property with minimal earnings($3,000) this past year. We use it for family.
Robin D :

If you place them on the property now then their basis is whatever they add to the money to purchase ($0 probably) so they would pay much more in tax

Robin D :

Plus you could have a gift tax situation for gifting them the percentage in the property

Robin D :

You say minimal earnings

Robin D :

If you used this as rental then you must recapture any depreciation you have claimed or could have claimed. Have you been filing a Schedule E and claiming this as rental?

Customer: Yes I have and I have been paying between $300-$500 yr. Never claimed depreciation or expenses.
Customer: Could we not purchase a Condo together (not a gift but a purchase) joint ownership?
Robin D :

Yes you can do that.

Customer: What are the advantages to this?
Robin D :

For tax purposes, you each have your basis inthe property based on what each pays to acquire

Robin D :

This means that if the unit is sold then the basis goes against the sales price to see if any gain is there to tax

Customer: And that is divided between all 6?
Robin D :

Yes, per their share in the property

Customer: So would you consider this a wise move? Your opinion.
Robin D :

If you all get along very well

Customer: Robin, is there a tax on Canadians when they sell their property.
Robin D :

Depends on the property

Robin D :

One minute and I will get that for you

Customer: Ha ha ...your absolutely right. I thought about that and what the repercussions would be. If they don't get along in the future could the one daughter(I have 4 daughters) who wants out not just sell her share to the others?
Robin D :

That could be and then the sale would just be on her taxes and the others could purchase her portion

Customer: You are unbelievable, where are you located? Could I hoer you to do this for me in case I go ahead with this? Robin do you know if there is a tax on Canadians who owe property and sell?
Robin D :

Canada is alot like the US when it comes to sale of personal use property

Robin D :

This is all about Canadian:If you sell your home for more than what it cost you, you usually do not have to report the sale on your return or pay tax on any gain as long as:



  • your home is your principal residence; and

  • you or a member of your family did not designate any other property as a principal residence while you owned your home

Robin D :

Regardless of whether or not the sale of a capital property results in a capital gain or loss, you have to file a return to report the transaction (even if you do not have to pay tax). Unlike the US where if you sale your main home and can exclude you do not report

Customer: So right now my Mom who is 82 yes old and in good health and I owe this property. We were joint owners with my Dad and sister who have both passed. It was determined that we owed no taxes on their death (something to do with a tax free amount up to a certain point which I guess we haven't reached) any advice on what we should be doing for tax purposes,she isn't getting any younger.
Robin D :

You will inherit her portion and have a stepped up basis. This means her portion will be yurs at the fair market value on date of death.
You asked about Canada, were you just curious or are you Canadian and own this property in Florida?

Customer: That is why I thought if we sold now that the market is low and included the children on the next purchase it just buys us time. Am I off base?
Robin D :

Does no good to add them for tax purposes.

Customer: Yes I am a Canadian that owns a condo in Florida. I am afraid of the tax implications when my mom and I pass.
Robin D :

Well if you sale the property then they will withhold 30% at the time of sale. You can file a US 1040NR return and request refund.

Robin D :

Sorry 10%

Robin D :

The tax withheld can be offset against the U.S. income tax payable on any gain realized on the sale, and refunded if it exceeds the tax liability. The 10% withholding requirement on the gross sales price applies regardless of the sellers adjusted basis in the property.


There are two exceptions to FIRPTAs 10% withholding requirement which may reduce or eliminate the requirement. Your sales price should save you

Robin D :

Since it is below $300000 then they may not withhold

Robin D :

As long as whoever buys it wants it for their main home

Robin D :

Also the estate tax is what must have saved you when you inherited

Robin D :

The US Estate tax for Nonresident aliens is higher but if this was the only property then it slipped under due to value

Customer: That's what I heard and I'm glad you verified it. I'm sorry to be asking so many questions but this rests on my shoulders and I don't want to see my daughters squeezed by taxes and then forced to sell when I'm gone.
Robin D :

Well if a condo is all US property then you should not be too worried

Robin D :

The U.S. taxable estate for a Canadian who is not domiciled in the U.S. is equal to the deceaseds property situated within the United States. This includes: real property located in the U.S. certain tangible personal property located in the U.S. shares of U.S. corporations, regardless of the location of the share certificates and regardless of where the shares are traded debts of U.S. persons, including the U.S. government interests in partnerships carrying on business in the U.S.

Customer: So by what I'm hearing it would be better for me to sell now and purchase another condo with all of our names on it as joint owners. At least then It would be under everyones name and the gains would be minimal on my mom and I passing. Am I on the right track.
Robin D :

Yes, in your situation it would be better.

Customer: Could I retain you if I sell the Condo and purchase another? Serious question.
Robin D :

I normally tell people no but if you are not a US resident then they should start off as owners too

Robin D :

To do what?

Customer: Do I not need a lawyer when I sell and buy and file etc....
Robin D :

You should have your own for the closing and to make sure the joint ownership is spelled out legally.
I am here and you can always come back to Just Answer. I am not allowed ot solicite users of this site for work away from this site.

Customer: I don't know of any lawyers in the Clearwater area that could help me,do you? Are you in this area? I could just come by your office that doesn't mean your soliciting.
Robin D :

No, thanks, XXXXX XXXXX am not a lawyer nor am I in Florida. Check with the real estate professional that will sale the property for you. They can advise on a lawyer in the area.
You can always come here and speak with me even after you click ACCEPT.

Customer: I appreciate your time and information in this matter. You have helped and clarified some key areas. If I come back in the near future could I ask for you specifically? Are there lawyers on this site that can answer the legal questions about joint ownership?
Robin D :

You are welcome and yes you can always ask for me. Just put "For TaxRobin in the start of the question. Yes there are lawyers so make sure you say your question should be for a real estate lawyer when you post it.

Customer: Thanks again for your help.
Robin D :

Best wishes

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,209
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
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Robin D.
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,209
16,209 Satisfied Customers
Experience: 15years with H & R Block. Divisional leader, Instructor

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