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If 2 people sign a quit claim on an investment property they…

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If 2 people sign a...
If 2 people sign a quit claim on an investment property they own with 1 other person, will there be tax consequences tantamount to selling 2/3 of the investment property to the 1 person who will be left in the title.
Submitted: 2 years ago.Category: Tax
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1/29/2016
Tax Professional: Barbara, Enrolled Agent replied 2 years ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,167
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

If the property is being transferred as a gift, the federal gift tax is applicable, and the tax is assessed on the fair market value of the property. Gifts over the annual exemption amount of $14,000 must be reported by each owner quitclaiming his/her interest, but are not taxable unless the lifetime exemption amount of $5.43 million has been met.

If the quitclaim deed is being used for the sale of a property, then the capital gains tax applies. The capital gains tax is calculated based on any profit from the sale, and each person would report his/her share of the sale.

Please let me know if you require further information or clarification. If so, please come back to me here and I will be happy to assist you further. If not, please take a moment to rate my answer since that is the only way I receive credit for answering you and alerts Just Answer to compensate me for a portion of the fee you previously paid.

Thank you and best regards,

Barb

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