Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

If I purchase a home for cash for 110,000 and then sell it…

If I purchase a...

If I purchase a home for cash for 110,000 and then sell it to my son and his wife for 80 (they take out a mortgage) will i have to pay capital gains?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

If I purchase a home for cash for 110,000 and then sell it to my son and his wife for 80 (they take out a mortgage) will i have to pay capital gains

Show More
Show Less
Ask Your Own Tax Question
Answered in 5 minutes by:
3/14/2018
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 57,039
Experience: 29 years of experience as a tax, real estate, and business attorney.
Verified

Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

Ask Your Own Tax Question

No, you will owe not taxes on the sale because you have no gain. The sale price is less than your basis of $110,000 so there is no gain and no tax to you. If it's value is in excess of $80,000, then you would be considered to have made a gift of the excess, but that won't involve any gift or income tax to either of you.

First, pursuant to Section 102 of the Internal Revenue Code, gifts are not income and thus do not need to be reported on the income tax return. There should be no gift tax consequences. Recipients of gifts are not subject to gift tax. And, there should also be no gift tax due from the donor. Each donor can give $14,000 ($15,000 in 2018) per year per person under the annual gift exclusion. In addition to that, for any amounts in excess of the $14,000/$15,000 in a year, each person has a $5,490,000 lifetime exemption ($11,200,000 in 2018)....which means a person can give a cumulative amount of up to $5,490,000 ($11,200,000 in 2018) in gifts over and above the $14,000/$15,000 annual gift exclusion amount without incurring gift tax....the donor must file a gift tax return to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative additional gifts have exceeded the $5,490,000 ($11,200,000 in 2018).

Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

Ask Your Own Tax Question
Customer reply replied 4 months ago
even if we upgrade the home and say its value goes up significantly say from 110,000 to 160,000 -- still no tax penalties for me or them?

That is correct. The value in excess of the sale price is simply a gift with no income or gift tax consequences. :)

Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 57,039
Experience: 29 years of experience as a tax, real estate, and business attorney.
Verified
Richard and 87 other Tax Specialists are ready to help you
Ask your own question now

Thank you so much for the 5-star rating! I know rating takes an additional step and I truly appreciate you taking the extra time!

Ask Your Own Tax Question
Customer reply replied 4 months ago
Richard, this is interesting information. Just to be sure I understand, I was under the impression that if you exceeded the 15,000 gift in one year, you paid taxes on the overage? So if i were to gift 25,000 in 2018 I am still not taxed on overage of 10K?
that is correct.
Ask Your Own Tax Question
Once over 15,000, you have the 11,200,000 lifetime exemption before any tax
Ask Your Own Tax Question
Customer reply replied 4 months ago
Hi Richard, hope you aren't tired of me yet. I need clarification on one more question. If I purchase this house for cash I am wanting to put my sons name on the title and not mine. Is that actually considered a gift? If it is a gift what type of forms have to be completed come tax time? I am weighing my options here and want to know what to expect. You have been great!

No worries. Yes, if you pay for the house and put your son's name on the title, it will be a gift. And, if the amount paid is over $15,000 (the annual exclusion amount), you'll need to file a gift tax return (Form 709) for the excess to let the IRS know how much of your life time exemption you are using. :)

Ask Your Own Tax Question
Customer reply replied 4 months ago
Richard,
I have one last thing that I am worried may be an issue. Perhaps you can advise. My son has 30K and I have decided instead of blowing that on down payment I would put up the additional 80K. My hope is that he can then own it and take out an equity loan if its in his name or a mortgage if its in mine-- to repay me the 80K. Is that illegal? I have no idea, I do know I want him to have the mortgage experience and write offs at tax time. So this is why I am trying to do it this way. But I was just thinking about when I return the 80K into my accounts that kind of kills the whole "gift" thing. I am so confused now

That won't be a problem. You can either structure this as a loan from you originally. Or, he can gift you back the money later when he gets a loan on the house.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Richard Your Own Question
Richard
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 57,039
57,039 Satisfied Customers
Experience: 29 years of experience as a tax, real estate, and business attorney.

Richard is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

57,039 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
My husband had a short sale with a home he has with his
My husband had a short sale with a home he has with his ex-wife this year. They have been divorced for 5 years. He received a 1099-S for $355,000. This was the total amount of the sale and in his name… read more
emc011075
emc011075
Tax advisor and Enrolled Agent
Bachelor\u0027s Degree
3,087 satisfied customers
A friend's wife just passed away a year ago Nov. He
A friend's wife just passed away a year ago Nov. He lives in Los Altos, Ca in a home they both owned together near SF while she lived in a home they owned in Palm Desert. They bought the home in 1996 … read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
My wife and I are planning on selling my home to my son. We
Hi Stephen, My wife and I are planning on selling my home to my son. We are gifting him part of the downpayment. We are selling it to him for between 300k and 310k. If we sell for 310k we will have ab… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
In 2008 my wife and I purchased a home with my son. The purchase
In 2008 my wife and I purchased a home with my son. The purchase price was $226,500. My son and my daughter have lived in the home and have made various monthly contributions to the mortgage payment. … read more
emc011075
emc011075
Tax advisor and Enrolled Agent
Bachelor\u0027s Degree
3,087 satisfied customers
Dear IRS. I am a retired female (Ruby). My situation is
Dear IRS. I am a retired female (Ruby). My situation is a follows: I purchased my mobile home in the year 2000 for $50k; I invested $60k into the mobile home for repairs and upgrades. I recently sold … read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
My spouse and I are going to sell my son and his spouse a 2nd
My spouse and I are going to sell my son and his spouse a 2nd home we own. The property is valued at $260,000 +/- 5K. We have a $150,000 mortgage on the home and approximately $110,000 equity. We want… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
47 satisfied customers
How much Tax would I pay after selling my house and the total
How much Tax would I pay after selling my house and the total pay is 4700 from the realtor on a house that cost 110 grand.About 7 years paying not paid off.Payments about 1500 a month.… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
47 satisfied customers
I just bought a home for my son and his family. They will
I just bought a home for my son and his family. They will be living in it and NOT making any payments. My wife and I are paying for it - and because of that it was financed for 30 years as a non-owner… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
My mother put her house in my name 20 years ago (19007, Pa.)
My mother put her house in my name 20 years ago (19007, Pa.) to be held in trust for my sister (Not good with money). Our Mother has passed. and my Sister now wishes to sell and has a buyer. She has p… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
my son bought his house. I gave him a mortgage, he had a drugs
my son bought his house. I gave him a mortgage, he had a drugs prblem, and never payed any money off the mortgage. after two years he transfered the house to my name. I have lived in the house for thr… read more
Marvin,EA
Marvin,EA
Enrolled Agent
Bachelor\u0027s Degree
1,663 satisfied customers
We live in Wisc. and bought a foreclosure farmette for $110,000
We live in Wisc. and bought a foreclosure farmette for $110,000 6 months ago, on behalf of our son. The intent is to sell the farmette back to our son after he sells his current house. Our son now has… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
The son bought a home and took out a mortgage for 80% of cost.
The son bought a home and took out a mortgage for 80% of cost. He then gave his 71 year old mother a life estate in the property. He continues to pay the morgage payment. Is the gift value based on th… read more
Mark D
Mark D
Enrolled Agent
Master's Degree
1,338 satisfied customers
HI My home is presently in foreclosure and I paid 254K ...
HI: My home is presently in foreclosure and I paid 254K for it as brand new construction 3 yrs ago. I now owe 185K to the mortgage company. My son is offering to pay 200K to pay off the mortgage compa… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
Will I have to pay taxes if I sell my home to my child I ...
Will I have to pay taxes if I sell my home to my child? I am gifting 20% of the equity of the home to them, because they do not qualify for PMI insurance, and we need to make the loan amount 80%. Is t… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
My mother-in-law deeded her home to my wife in 2001 ...
My mother-in-law deeded her home to my wife in 2001 Reserving Life Estate so she could continue to live in home. My wife and I live in another state so my wife had no residency in home. Mother -in-law… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
I want to gift the equity ($ 75,000) in a home I am renting ...
I want to gift the equity ($ 75,000) in a home I am renting to my son and his wife and 4 children. They have clean credit now and can qualify for a loan and would like to purchase the home. Can I gift… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
My wife & I own a residence we have lived in for 28
My wife & I own a residence we have lived in for 28 years. Three years ago we bought a home which our son lives in, along with other college students ( who paid rent). Both properties are homesteaded … read more
Zhicheng Lai
Zhicheng Lai
Master Degree
426 satisfied customers
We are transferring partial interest (60%) in a residential ...
We are transferring partial interest (60%) in a residential property (PUD) from our older son to ourselves, and we are transferring our partial interest (40%) to our younger son. Does our 40% grant de… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,127 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x