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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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My elderly mother sold her house and since all her children

Customer Question

my elderly mother sold her house and since all her children were on the deed, we all get a substantial payout. We will get a 1099 for this year. How will this affect my taxes? Do I need to save out a certain percentage for taxes?
Submitted: 1 year ago.
Category: Tax
Expert:  JACUSTOMER-8nme36c9- replied 1 year ago.
There are six states where this could be taxable to you. They are Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. If her house was in one of these states then there is calculating to do. In California I do not foresee this being taxable to you. You will report for informational purposes only.
Customer: replied 1 year ago.
So there is no Federal Tax involved either?
Also, I plan to divide this money between my 2 adult children. Are there any taxes incurred in California for Federal or State for them to receive a gift of money over a certain amount, like $10,000 - $20,000?
Customer: replied 1 year ago.
I've been told you can get a gift up to $10,000 and not be taxable. Otherwise it is treated like a sale of property and you divide the income and expenses including fair market value and pay tax on the net profit and that I'd have to pay Federal and CA tax on it even though it was sold in another state (ND).
Customer: replied 1 year ago.
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Customer: replied 1 year ago.
I'm not able to talk about this on the phone now so would like to continue with the original offer of an answer by email. I sent 2 additional messages after your first response. Would someone be able to respond to those by email, please?
Expert:  JACUSTOMER-8nme36c9- replied 1 year ago.
The sale of this home would not qualify for exclusion because it is not the primary residence for the deed holders. It would be treated as a capital gain. If you sell your second home, your capital gains is the portion of the proceeds that exceeds what you paid for the property, plus the cost of any improvements you made over the years. You can deduct many of the closing costs associated with the sale from your proceeds, however. The tax rate for long-term capital gains such as those involving real estate is 15 percent. This increases to 20 percent if you earn more than $400,000, or $450,000 if you're married and file a joint return. For the federal level here is the gift tax exclusion - you can give away as much of your money as you want, tax-free, as long as you don't give more than $14,000 to any one person during the year.