Posted by JHyre in Ohio on October 30, 2002 at 09:36:57:
Yep…and I’m talking about the INCOME tax exclusion. The fact that the house was already given to your sister means that your mom needed to file a GIFT tax return.
John Hyre
gift tax-exclusion rule - Posted by walter gartner
Posted by walter gartner on October 29, 2002 at 12:01:58:
greetings.
my sis- recieved a 2-family home as a gift from mom. She is the primary resident for approx 8 months. My sis. wants to sell it asap. Does the exclusion rule apply to her??? Plus she might be moving due to her job-amercian airlines-flight attend. Whats the best way to sell it???
Re: gift tax-exclusion rule - Posted by Dave T
Posted by Dave T on November 10, 2002 at 22:55:35:
Your post described the property as a two family. Since your sister can only occupy one unit as her primary residence, then the capital gains exclusion rules can only be applied to portion of the sale profits attributed to her residence unit. The sale of the other unit will be treated as an investment property transactions and the profits likely taxed as a short term capital gain. Depreciation recapture will come into play here as well.
One strategy to sell at this point is to turn both units into rentals, at least until the long term capital gains tax rate comes into play. Then the capital gains exclusion would still apply to the residence unit, while the profit on the investment unit would be taxed as a long term capital gain.
Of course, this assumes that your sister does not want to acquire an investment property in her new job location and use a 1031 exchange for the investment unit to defer the capital gains taxes (possibly)indefinitely.
Re: gift tax-exclusion rule - Posted by JHyre in Ohio
Posted by JHyre in Ohio on October 30, 2002 at 07:05:37:
Given that she’s moving after 8 months and is presumably single, she should be able to exclude up to $83,333 in gain.
John Hyre
Re: gift tax-exclusion rule - Posted by wgartner
Posted by wgartner on October 30, 2002 at 07:39:10:
thxs for your response…
just a follow up, the property is in ny-queens --so its best to hold it down for at least 2 years to get the full $250,000 exclusion rule…correct???
thxs aagain…