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Mrs. Goofy's father (age 87) owns a condo, which he is selling. Several years ago he put one of the daughter's names as "co-owner", even though she has never lived there, paid rent or mortgage, common fees, or had anything else to do with the property. (This is in Pennsylvania, FWIW.)

Because of a divorce, he owned both the house that the mother lived in and the condo for a concurrent period of two decades. What happened with the sale of the house I don't know; I'm investigating.

The condo is his principle residence, and has been for 30 years. Now that the condo is being sold, is the daughter responsible for half of the capital gain (and cannot shield the proceeds by the rollover rule), or can the father use the exclusion rule to shelter all the profit (which is modest, but meaningful to him at 87 years old.) [He is living with the daughter now.]

The title company is insisting on filling out a form assigning the tax consequences within the next three days (why, I don't know), while he doesn't even have an accountant anymore (died) or lawyer (long since.)

1) Is there a need to fill out this info so quickly, before we can find a competent CPA or other?

2) Opinion on the tangle of ownership and profit exclusion.

Thanks for any help; if I've failed to include some piece of relevant info, just holler.
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Mrs. Goofy's father (age 87) owns a condo, which he is selling. Several years ago he put one of the daughter's names as "co-owner", even though she has never lived there, paid rent or mortgage, common fees, or had anything else to do with the property. (This is in Pennsylvania, FWIW.)

Because of a divorce, he owned both the house that the mother lived in and the condo for a concurrent period of two decades. What happened with the sale of the house I don't know; I'm investigating.

The condo is his principle residence, and has been for 30 years. Now that the condo is being sold, is the daughter responsible for half of the capital gain (and cannot shield the proceeds by the rollover rule), or can the father use the exclusion rule to shelter all the profit (which is modest, but meaningful to him at 87 years old.) [He is living with the daughter now.]

The title company is insisting on filling out a form assigning the tax consequences within the next three days


They only need one name and SSN, so use his. (He should not sign anything indicating that the sale is exempt from reporting because it meets the principal residence exclusion rules.)

Then when the dust settles he can reap the rewards of DIY estate planning, the gift that keeps on giving, and hire someone to see if (s)he can come up with a theory through which they can say the profit was entirely his.

Phil
Rule Your Retirement Home Fool
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Then when the dust settles he can reap the rewards of DIY estate planning, the gift that keeps on giving, and hire someone to see if (s)he can come up with a theory through which they can say the profit was entirely his.

That's pretty much my take on it too. He's always one to save a nickel and end up spending a dollar.

They only need one name and SSN

Both names are on the deed, so they are insisting that both names be listed on the document as well. Having read through all the relevant IRS docs I can find, I don't find anything that allows her to exclude, but I thought I'd ask and see if anyone else had any theories.

Thanks.
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Both names are on the deed, so they are insisting that both names be listed on the document as well.

Then give them both SSN's. It's easy to deal with if you come up with good news.

Having read through all the relevant IRS docs I can find, I don't find anything that allows her to exclude, but I thought I'd ask and see if anyone else had any theories.

It's clear that if any of the gain is hers (under state law) she can't exclude it from income. The one possibility I can think of is to argue that she was his "nominee" who never made any financial contribution to or had any interest in the property and, thus, doesn't get any of the proceeds.

Phil
Rule Your Retirement Home Fool
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TMFPMarti:

<<<Both names are on the deed, so they are insisting that both names be listed on the document as well.>>>

"Then give them both SSN's. It's easy to deal with if you come up with good news.

Having read through all the relevant IRS docs I can find, I don't find anything that allows her to exclude, but I thought I'd ask and see if anyone else had any theories.

It's clear that if any of the gain is hers (under state law) she can't exclude it from income. The one possibility I can think of is to argue that she was his "nominee" who never made any financial contribution to or had any interest in the property and, thus, doesn't get any of the proceeds."


Why would anyone need a nominee for a part interest in the property?

And I note that if the gain is taxable to the daughter/sister, if she allows the father to keep all the net proceeds, she is making a gift to the father and may have gift tax issues to deal with (even if no gift tax is actually due).

Regards, JAFO
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...Several years ago he put one of the daughter's names as "co-owner"...

My financial planner suggested that if I ever discover that my father's added my name to any of his accounts or property, then I could most likely successfully disclaim that ownership, on the grounds that I never knew about or consented to it. (My father's also a DIY-er, grrr...)

If the daughter knew about and/or consented to her part-ownership, that would hurt her case. Even if she didn't, "most likely" is unfortunately not as good as "assuredly." But it's something to add to the list of things to look into.
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