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If Shane's share of the house, which was 10%, is the result of putting $3600 into the house whose purchase price was $125,000, then perhaps there is something in the Deed that says Shane is a 10% owner, with uncle and dad having other percentages listed. Perhaps I am misreading things and $3600 is what Shane contributed in cash to the fix-up. But I observe 10% of $125,000 is $12,500.

True, but if there was a mortgage, a 10% share wouldn't necessarily have cost $12,500. A $125,000 house with a $100,000 mortgage would have cost only $2,500 for an initial 10% buy-in, plus his share of improvements and mortgage payments. Regardless, for tax purposes his basis is going to be what he put into it.

So here's my question: despite whatever money Shane may have put in, either in the purchase price or contributions to the repairs, is his share of the capital gain 10% if that is his ownership percentage on the Deed?

The capital gain is figured by owner, not by property. Thus, his gain will be his share of the proceeds minus his basis.

As a secondary question, if no percentages are listed on the Deed and the property was held either as joint tenancy or tenancy in common, is Shane held to have had 1/3 of the gain?

This is a property, not a tax, law question, and the answer would depend on state law.

Phil Marti

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