Posted by Kelley on August 10, 2006 at 15:11:15:
Glad it worked out. Best of luck with the house.
Affidavit of Seller’s Gain - Posted by GINA
Posted by GINA on August 07, 2006 at 22:57:49:
I’m purchasing a home from my parents that I’ve been renting for 3 years. I’m receiving a 48K gift of equity for a total sale price of 216K. The affidavit of seller’s gain shows: Sale Price (216K), Less cost and Less Selling expenses. Do I include the gift of equity? If so, where? I know that no capital gains needs to be paid on the gift and omitting the equity on the affidavit shows a higher Taxable Gain.
Re: Affidavit of Seller’s Gain - Posted by Kelley
Posted by Kelley on August 09, 2006 at 12:24:24:
By a gift of equity do you mean a seller’s contract concession? Would the price of the house to an unrelated 3rd party have been $264K?
Re: Affidavit of Seller’s Gain - Posted by GINA
Posted by GINA on August 09, 2006 at 15:39:41:
The price of the house would go to 168K (my purchase price or mortgage
loan). There’s 48K of equity in the home in which my parents are gifting
to me. The affidavit of seller’s gain is to let the state know how much
capital gain was made to withhold state taxes. But my parents are giving
me the equity as a gift. There shouldn’t be any taxes on it. How would I
put that on the affidavit? As a seller’s cost?
Re: Affidavit of Seller’s Gain - Posted by Kelley
Posted by Kelley on August 09, 2006 at 19:05:36:
Unless I’m misunderstanding the situation, your parents are effectively taking $48K off the price of the house and aren’t realizing a gain on this amount. If the contract states a price of $168K then wouldn’t this amount be input on the Affidavit of Gain? Alternatively, I suppose they can put $216K as the sales price and then include the $48K as a selling expense. If you have a closing atty., or if your parents use an accountant, ask them. There may more implications than I’m aware of with respect to the tax treatment of the $48K gift. This is for state tax purposes?
Re: Affidavit of Seller’s Gain - Posted by GINA
Posted by GINA on August 09, 2006 at 19:23:30:
Actually, they bought the house 3 years ago for 168K. Today it’s
apprasied at 216K. I am buying it for what they paid- 168K. The
contract’s sale price is 216K for two reasons- first, instead of 100%
financing; it’s about 80% with the gift of equity and a better rate.
Second, it keeps the selling value up in the neighborhood. Don’t want
angry neighbors. The accountant said that there isn’t any taxes on the
gift of equity. When I asked the closing atty on how or where to state
this on the affidavit, he didn’t want to advise me (he hasn’t been much
help). Leaving it off the affidavit shows a profit of 48K which then can
be taxed by the state. Hope this clarifies.
Re: Affidavit of Seller’s Gain - Posted by Kelley
Posted by Kelley on August 09, 2006 at 19:38:03:
It’s a bit odd that your r.e. atty. wouldn’t advise you on a real estate/tax matter. That aside, this does seem to be a seller’s contract concession as you’ve stated the contract price is $216K. I think the $48K concession could be categorized as a seller’s expense on the gain affidavit. Where and how in the contract is the $48K gift set forth?
Re: Affidavit of Seller’s Gain - Posted by GINA
Posted by GINA on August 09, 2006 at 20:07:13:
I found it odd, too. Atty kept pawning me to my CPA, but the CPA gave
me the info I needed. I just needed to know where or how on the
affidavit to put it. Anyway, the Sales contract under Purchase Price
states as follows: 48K in gift of equity from seller and 168,000 in
mortgage to seller. I assumed that the 48K could be put under the
seller’s expense on the affidavit, but I wasn’t sure. There’s nowhere
else to put it and I don’t want to leave it out.
P.S. I appreciate your help on this.
Re: Affidavit of Seller’s Gain - Posted by Kelley
Posted by Kelley on August 09, 2006 at 20:18:21:
That’s where I would put it,as well. I’d list the sales price as $216K and the $48K as a seller’s expense.
Re: Affidavit of Seller’s Gain - Posted by GINA
Posted by GINA on August 10, 2006 at 14:06:55:
I appreciate all your help. It’s exactly what I did a couple of days ago. I
receive a phone call from the attorney saying I filled it wrong. The sales
price is 216K and under “Less Cost” is the 168K. Then the remaining
48K will zero out with the gift of equity. Why couldn’t they have told
me that before! Therefore there wouldn’t be any gain! They had
previously told me that the “Less Cost” was for home improvement
cost. Argh.
Thanks again!