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Louisiana House Sale ~ We Are Financing For Buyers ~ Money

Customer Question
Will Be Deposited Into Mom's...
Louisiana House Sale ~ We Are Financing For Buyers ~ Money Will Be Deposited Into Mom's Account ~ Was Mom's Residence Since 1975 ~ I'm signing everything as Power Of Attorney

Mom draws Louisiana State Retirement - Retired From DA's Office
How can we keep this from affecting her retirement
And Keep IRS from coming after me for Capital Gains over 1099 ~
Submitted: 4 years ago.Category: Tax
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Answered in 26 minutes by:
10/7/2013
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 4 years ago
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

Since you are just the power of attorney, the capital gain will not be attributed to you. Your mother is still the one selling the house, and as such any gain would be attributable to her, not you. She can exclude up to $250,000 of gains on the sale of her primary residence. So, chances are she owes no tax on this transaction.

Megan C :

Also, as this is unearned income, the sale of the house should not impact her LA State retirement

Megan C :

However, you just need to make sure that your mother is listed as the seller of the house, and that you are just signing as power of attorney. Then, you have nothing to worry about in terms of being on the hook for any capital gains tax.

Megan C :

Do you have any further questions about this matter?

Megan C :

If not, please rate as "excellent" so that I may receive credit for assisting you today

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Customer reply replied 4 years ago
Thank you for the fast reply and of course I do have a few more questions.
Following is the wording in the credit sale and mortgage.

BE IT KNOWN, that this day before me, the undersigned authority, a Notary Public, in and for the said Parish/County, duly commissioned and sworn, came and appeared:
Alma Jewel Willhite (SS# XXXXX), a single woman,
domiciled at 1001 E. Bear Lake Road, Tallulah, Louisiana 71282,
(hereinafter "Vendors"),

JAMES MICHAEL WILLHITE (SS# XXXXX), a single man,
major resident whose mailing address isXXXXX Apt. #2,
Monroe, LA 71204, individually and as the Power of Attorney for
Alma Jewel Willhite, (hererafter Vendors")

who declare that they do by these present, grant, bargain, sell, convey and deliver, with full guarantee title, and with complete transfer and subrogation of all rights and actions of warranty against all former proprietors of the property herein conveyed, together with all rights of prescription whether acquisitive or

The "Individually" in my description has me concerned.

Should I be listed on this document at all?

Thanks
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 4 years ago
Mike,

All that means is that you showed up physically before the notary public. If you were not listed on the deed of the house, you are not conisdered a seller. If you were on the house deed, then that is a different story. But, only your mother is considered the seller.

You have to be mentioned on the document because your signature appears on behalf of your mother, that's all.

Is there anything else I can assist you with today? If not, please rate as "excellent" so that I may receive credit for assisting you today.
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Customer reply replied 4 years ago
How should the 1099 be made out. At the moment it is as follows:

2)Seller Type........................ I (9)
B=Business I=Individual

3)Seller Name Line 1.................. James Michael Willhite (1)

Line 2................. (1)

10)Principal Residence ................ N (1)
Prior to Sale was the property the principal residence of the
Seller Y=Yes N= No

The above information is correct and I understand that I will receive a Form 1099-5 by January 31 next year and a copy of the 1099-5 will be mailed to the Internal Revenue Service reporting this transaction.

________________
Seller Signature Date
JAMES MICHAEL WILLHITE

Do I Need to have that changed to her name?
AND it will not affect her State Retirement Income?

As stated before this had been her residence since 1975. She now lives in retirement Appts.
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 4 years ago
The seller name should be your mother's name, and line 10 should be noted as "Y" if she lived there 2 out of the last 5 years

Thanks again, Mike for replying back and let me know how I can further assist. If you have all your questions answered, please rate as "excellent" so that I may receive credit for assisting you today.
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Customer reply replied 4 years ago
Hi Megan, Thank You Very Much.
I want to pay you fairly for the great help you have given me concerning the tax problems. Let me know how to add additional money to the payment.

Now I have questions about other wording in the Sale Deed And Mortgage. Can you answer this?

Applies to people purchasing but wording of "seized and sold under executory process, without appraisement, to the highest bidder for cash;" bothers me.
How does this affect me. I want the property to default back to Mom and Myself if payments not received.

The said Vendees further declared that they do by these present agree and stipulate that in the event of said note not being paid at maturity, or it shall be lawful for and Vendees hereby authorize the said mortgagees, or any future lawful holder(s) of said note, to cause all and singular the said property herein mortgaged to be seized and sold under executory process, without appraisement, to the highest bidder for cash; the said Vendees hereby confess judgment in favor of the said mortgagees and any future lawful holder of said note, for the full amount thereof, together with all costs, charges and expenses
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 4 years ago
Thank you for your follow up, Mike. At the end of the transaction, after you rate my response you will be given the option to leave a bonus. Those are appreciated, but never expected.

Now, I have to be completely honest with you - I think you are fine with the wording, but I am not a real estate attorney. I think that it just gives you the right to auction the property off and sell it, if you chose. But, if you wanted to keep it I do not think you would be required to have the auction. However, I would feel more comfortable if you ran that question by someone who handles real estate law, as I don't want to tell you something that has an unintended consequence. I can only assist with the tax related issues.

Please let me know if I can be of further assistance. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Tax Professional: Megan C, Certified Public Accountant (CPA) replied 4 years ago
Thanks, Mike for the positive rating and very generous bonus. It is greatly appreciated. If you ever need any assistance with tax issues, please feel free to come back and ask for me directly. Thanks again, and I hope you have a wonderful day.
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Megan C
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
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Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

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