Posted by chet on January 04, 2005 at 24:51:02:
I would say gift in-kind rather tha as cash. so execute a quit claim for whatever percentage 11K (or the 2005 gift maximum) would be of the FMV.
capital gains on condo - Posted by chuck
Posted by chuck on January 03, 2005 at 09:25:31:
My siblings and I own a condo, which we bought ten years ago for our dad to live in. The condo is in my name only, each sibling has an equal share, and neither I nor my siblings have ever declared my dad as a dependent. He paid no rent (he is really poor). He has just moved into senior housing, and we want to sell the unit. My primary residence is another condo that I own. Both units are in New Jersey. What is the best way to handle this that would minimize capital gains? Thanks!
Re: capital gains on condo - Posted by Dave T
Posted by Dave T on January 15, 2005 at 21:08:41:
I am certainly no expert here, but I would like to throw out my idea for consideration.
How about forming a Family Limited Partnership, with yourself as the managing partner with the sole power to unilaterally sell real assets of the partnerhip on behalf of the partnership. Contribute the property to the partnership at its current adjusted basis.
Then sell the property, and issue each limited partner their distributive share. Issue K-1s to reflect the distribution of each partner’s share of the capital gain. This way you don’t take the tax hit on the full sale profits.
Run this by your professional entity special-ist and tax advisor to confirm that this concept will work for you.
Re: capital gains on condo - Posted by John K Haslach, CPA, MST
Posted by John K Haslach, CPA, MST on January 04, 2005 at 12:28:38:
Chuck, sit down with an accountant who is comfortable in this area and discuss your options with the accountant.
Re: capital gains on condo - Posted by Lynn
Posted by Lynn on January 03, 2005 at 16:38:55:
Is the mortgage in your name only or the title? If it’s the title, then I’m not sure how your siblings have an equal share other than they shared the expenses with you. If you sell and they are not on the title, you’re the one that’s going to be liable for the gain. I would think you could Quit Claim certain percentage to them, but then would it be a short term gain for them? If that doesn’t work, then pay your taxes and gift each of them the after tax amount of their share (following the gifting rules for amounts). How was it handled on your tax returns? Was it listed as a rental property or a second home? Did each of you take a portion of the depreciation or just you (if it was a rental property)? I would talk with your accountant. If it hasn’t been listed as a rental property then you may want to rent it for a year then do a 1031 tax deferred exchange (you can each go your separate ways at that time). If you don’t want to rent it again, then I don’t see any way around the Capital Gains. I also think there are some rules about “renting” to family members and not charging reasonable rent. I’d be interested in the answers.
Good luck!
Re: capital gains on condo - Posted by chuck
Posted by chuck on January 03, 2005 at 18:51:06:
Thanks to both Lynn and Chet for the responses. I am the only person listed on both the title and the mortgage. We all shared the expenses equally, and my dad did not pay rent, nor did any of us declare him as a dependent. The property was listed as a second home for me. I will check with my accountant about the Quit Claim and the 1031.Thanks!
Re: capital gains on condo - Posted by chet
Posted by chet on January 03, 2005 at 18:17:36:
"then pay your taxes and gift each of them the after tax amount of their share "
Since the gift is tax free, do it in the other order.
Gift ea. sibling $10K on 12/31/04 (is it too late to eck this by?) and $10K on 1/1/05, this way you save tax on the gifted portion.
Re: capital gains on condo - Posted by Lynn
Posted by Lynn on January 03, 2005 at 21:19:34:
Good point, Chet, but in order to do it in the other order, you must gift a % of the value of the property through legal title changes. Last I checked it was $11000 for 2004 per gift, hopefully that went up in 2005. It’s definitely too late for 2004, but maybe not if he writes checks. If the other siblings simply want to cash out, it shouldn’t matter which way it goes, assuming they also live in NJ and their tax basis is all the same…why do these honorable things we do for our family have to get so complicated?