In Jan. '08, I obtained the title of the home thru a quit claim deed. I have been renting & living in it for 10 years. The mortgage was paid off May of 2007 by the owner, my boyfriend, who owned it since 1992, but due to work transfers, he has not lived in it for 10 years. I paid him rent until he quitclaimed it. We had an agreement that I would pay him half if I ever sold it; no real sales contract. Just after the quit claim deed was filed (State of Florida), my job transferred me 300 miles away. I need $100K for a down payment in the new location/so I put the house for sale/ & received an offer from the relo company ($275). When I reach my new destination in Aug. '08, I plan to have my 80 yr. old mother live with me, so I will be head of household. I plan to pay my boyfriend for half of the sale of the house. I will obtain a mortgage for about $200K. Now, I am trying to lower my adjusted gross income & taxable income so as to minimize the impact of capital gains. My understanding is, I will be paying 33%. I can contribute some more to my 401K by adding catch up contributions. Other than that: Is there anything I can do & any opportunities to avoid paying such high taxes this coming year??? Let's see if we can nail down your taxable gain before panicking. Since your move less than 2 years after purchase is because of a change in employment you'll at least get to exclude 7/24ths of your taxable gain, which is your net sales proceeds minus your BF's adjusted basis at the time of sale. If he's only been out of the house 10 years, there was probably still significant basis when he quit claimed it since he's depreciated it as a rental for only slightly more than half the prescribed period. You do know that mortgage balance has nothing to do with basis, right? So, you need to get together with him and find out those numbers.You might want to consult a real estate lawyer to see if there's some way under state property law that you could be considered to have been the owner earlier than 1/2008. It's doubtful, but a quick consultation shouldn't cost much.You might also file away for future reference that had you two gotten some legal and tax advice at the time of the transfer you wouldn't be in this pickle. It's like the old Fram oil filter commercials: Pay me now or pay me later.Phil
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar<