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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29774
Experience:  Taxes, Immigration, Labor Relations
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My parents left a condo to me and my sister. She wants to

Customer Question

My parents left a condo to me and my sister. She wants to live in the condo. The condo is worth $100000. The mortgage and taxes are $360 a month. The association us $160. Who pays what? Do we each get half the proceeds when we eventually sell the cindo?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

I assume - the condo was inherited - correct?
If so - we need to know the fair market value at the time the decedent passed away - that would be the basis.

When eventually the condo is sold - the taxable gain will be calculated as (selling price) MINUS (basis)

So if the condo is worth $100000 and later you sell it for $105,000 - your taxable gain would be $5000.

Regarding mortgage payments - the issue is that the mortgage provider has a registered lien on the property - and if the mortgage is not paid timely - there are additional charges which have to be paid anyway - otherwise all fees will be taken out when the property is sold.

Similarly real estate taxes - all must be paid when the property is sold and the title is transferred to the buyer.

If there are several co-owners - that is between you and your sister who will make payments related to that property.

Regarding proceeds and taxable income - these are divided according to percentage of the ownership. So - if you and your sister are equal owners - proceeds are divided equally.

Let me know if you need any help.

Customer: replied 1 year ago.
My sister lives in the condo and she pays the mortgage payment, the taxes and the association. She refuses to sell the condo since she can live in it more inexpensively then she could any where else. My choice is to sell it and and split the proceeds. However, I know she needs an inexpensive place to live, and I am not going to force a sale leaving her nowhere to go.We own the condo equally, we inherited it from our parents. Eventually tho, if she agrees to sell the condo some day do we as equal owners share the profit equally taking into account taxable gain. She doesn't think so because she says she paid the mortgage, taxes, association for x amount of years and she doesnt think i should colIect half the profit. This is the crux of my question. Do we share the proceeds equally if for instance she has lived in the condo for say four years and paid the mortgage, taxes and association?
Customer: replied 1 year ago.
If I had the choice I'd sell it. If not, I would rent it to a stranger ... not my sister who feels that by her living there and keeping up with the expenses that I somehow am no longer a half owner.
Expert:  Lev replied 1 year ago.

Yes - as each of you own equal shares - proceeds and expected taxable gain will be divided equally.

When the condo eventually will be sold - each will report on the tax return the sale of 50% interest in the property each of you own.

Regarding facts that your sister is using the condo and that she pays mortgage and other expenses - generally you need to value the use and compare expenses she pays - and that is a civil matter between you and your sister.

Generally in similar situations - if your sister wants to own the property - the property should be transferred to her name only and she should refinance in her name only and pay you your share from that refinanced amount. After that you will not own the property and will not be responsible for the mortgage or other fees associated with the condo.

But again - that is between you and your sister.

Customer: replied 1 year ago.
I don't understand this paragraph ....
Regarding the fact that your sister is using the condo and that she pays mortgage and other expenses - generally you need to value the use and compare expenses she pays - and that is a civil matter between you and your sister.Value the use? Do you mean compare what it costs to rent a condo in that development versus what she is paying monthly??If I understand you ... it doesn't matter what she pays to live there ... if the day comes that we sell it ... we still share the profits equally after expenses. Is that correct?
Customer: replied 1 year ago.
Upon the death of my parents the deed to the condo automaticly transfers to my sister and I. My sister feels I should pay half the condo mortgage, taxes and association and expenses even tho she lives there becsuse I am half owner. And if I don't she doesn't feel I should get half the proceeds of sale. Could this reasoning be right?
Customer: replied 1 year ago.
She can't get a mortgage on her own to buy me out. So refinancing is not an option.
Expert:  Lev replied 1 year ago.

Yes - correct.
If your sister is not able to buy you out - there are two options - either you sell the property and divide proceeds OR
you just allow your sister to use the property and she would pay you some rent - probably less than the fair rental value or might be living rent free - and that is a civil matter between you and your sister.
However - as you are equal owners - when eventually the property is sold - proceeds are divided equally - but if you both agree - the division might be different - otherwise - proceeds are divided according to the percentage of the ownership.

Whatever your sister thinks - and whatever you think is not relevant. If you do not agree on terms - either party may sue - but I hope you will have satisfactory agreement.

Otherwise - proceed from sale will be divided equally.

Expert:  Lev replied 1 year ago.

Does that answer your question?

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