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Financial Planning / Tax Strategies
|Subject: Re: Need help with house problem||Date: 12/10/2005 10:47 PM|
|Author: TMFPMarti||Number: 81862 of 121572|
Probably asking after the fact.
Congratulations on winning the Understatement of the Day award.
WE owned a house we used to live in. Adult son & wife moved in and were to buy the house within year. They were making the mortgage payment. They never did put the house in their name.
Considering the fact that they didn't own it, they hardly could. Did you give them any kind of deed?
After 6 years, values went up on real estate. We decided we needed to sell the house & get some $$ ready for retirement. They then claimed we GAVE the house to them ( we didn't).
I'm not a lawyer, but IIRC any transfer of real property must be in writing. "Statute of Frauds" comes to mind, but maybe JAFO will be along to confirm or tell me I'm full of beans.
Since it had been 6 years, we are in line to pay capital gains now.
Possibly. See below.
Plus, they were demanding $90K to leave the property.
I've been demanding winning lottery numbers for years with little result.
We settled on $40,000. We never did depreciate the property and they took the deduction each year. We refinanced so their payment was much less than rent would have been.
Now we're getting into tax law, and I have a question: What the H-E-double hockeysticks have you people been putting on your returns? You've been liable for the mortgage payments, but they've been paying them. That means no one gets a mortgage interest deduction. If they've also been paying the property taxes, no one gets that deduction either.
They are wanting their portion of the payout to be tax-free.
If you haven't figured this out by now, that's their concern, not yours.
It's just a big mess
I spoke too soon. This is the Understatement of the Day.
and adult children are not speaking to us at this point. WE have 6 other children and we don't just go around giving away houses. Any ideas from anyone on how to reduce the capital gains on this property which has always been in our name?
Throw your greedy child & family out, using the law if necessary, and move back in and live there for 2 years before selling it. Otherwise you owe tax on the entire gain.
I'm not going to venture into what you need to do to straighten out any tax problems you may have created during the period they occupied the house. Hire a CPA to review it.
My best advice is for you and spouse to sit down and have serious discussions about what you want to salvage from this mess, including family relationships. No matter what you decide, there's going to be a sizeable "ouch" factor.
Once you've decided, hire a lawyer to get it done.
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