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Hello,

My mother will receive around $150,000 from the sale of her condo. She doesn't need the money, and does not want to purchase another property.

She wants to give the money to my sister and me. Can anyone advise on the tax conseques for me and my sister? (All three of us were owners of this condo, although it was my mother's)

Also, where should we put the money (short term) until we figure out what to do with it?

Thank you for your advice.

KB
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Also, where should we put the money (short term) until we figure out what to do with it?

I don't mean to be harsh, but I'm cranky this morning. Put a big chunk of it on a good lawyer and a good tax advisor, which you should have done in the first place, to straighten out the mess that the three of you have created.

On the surface you and your sister have taxable capital gains on the sale. Your mother, assuming she lived in the condo for 2 of the 5 years preceding sale and her share of the profit is less than $250,000, has no tax liability on the sale.

Maybe advisors who know local property law and can delve into the history of the property can come up with something.

Phil Marti
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Hello,

When the property closes request separate checks and separate 1099s.
This is not unusual and makes each of your tax returns independent.

If it has been her home for more than 2 of the last 5 years then she has no tax liability.

You and your sister will need to declare the proceeds of your portion.
If the property was a gift then the cost was your mothers cost. If you paid for the property then it is your cost.

If your mother added you to the title as a gift you should seek the advice of a tax professional. She probably needs to file a gift tax return for that year. Transfer of title of real estate should not be done without professional advise.

She can give each of you $11,000 a year with out tax consequences.

Debra




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Hello,

I have reread Phil Marti reply. I agree with his advice to seek professional help. If she is not already in escrow maybe you can undo some of situation you have created. Do not try what others have done and that is to transfer title back to your mother believing that will undo the orginal transfer. It does not and creates more problems.

Debra
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I apologize for my unclear post. Let me clarify.

My sister and my mother are both on the deed. My mother orginally bought the property and a few yeas ago, my sister moved in and they refinanced the property together. They have both been living in the property, and sharing the mortgage.

Are there any tax implications for my sister, if my mother gives all of the profits to my sister?

Thank you, and I hope this clarifies the situation.

KB
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umma2three: "I apologize for my unclear post. Let me clarify.

My sister and my mother are both on the deed. My mother orginally bought the property and a few yeas ago, my sister moved in and they refinanced the property together. They have both been living in the property, and sharing the mortgage."


I am not nearly as good on taxes as Phil, but I know a little something about real estate and I am still confused. If your "mother originally bought the property," when did your sister acquire her interest ("both on the deed") in the property?

Just because your sister was part of the refinancing (i.e., undertook obligations to the lender to repay money) does not necessarily mean that she owns any of the property.

Confusedly, JAFO

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My mother bought the property in 1984. Then refinanced with my sister around 8 years ago.

I am a litte confused. How do you define ownership of a property?

Thanks.
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umma2three: {{{{"I apologize for my unclear post. Let me clarify.

My sister and my mother are both on the deed. My mother orginally bought the property and a few yeas ago, my sister moved in and they refinanced the property together. They have both been living in the property, and sharing the mortgage."}}}}

[JAFO responded] <<<<I am not nearly as good on taxes as Phil, but I know a little something about real estate and I am still confused. If your "mother originally bought the property," when did your sister acquire her interest ("both on the deed") in the property?

Just because your sister was part of the refinancing (i.e., undertook obligations to the lender to repay money) does not necessarily mean that she owns any of the property.>>>>

umma2three: "My mother bought the property in 1984. Then refinanced with my sister around 8 years ago.

I am a litte confused. How do you define ownership of a property?"


This is real property we a re discussing, so it takes a Deed (of some kind, general warranty, limited warranty, quitclaim, etc.) to vest an ownership interest. (I am ignoring contracts for deed and lease options).

If your mother bought the property in 1984, then there should have been a deed that listed her as grantee.

Was there ever a deed from you mother to your sister, either of the entire property or some undivided interest? You never mentioned one in any of your posts. IOW, by what instrument did your sister acquire her interest in the property.

The primary documents of interest to the lender in a loan situation are the note, which contains the promise to repay, signed by whomever has agreed to reapy the loan, and the mortgage (or deed of trust) which pledges the real estate as collateral if the loan is not repaid, and which is executed by the owner(s) of the real estate. There may well also be a loan agreement, a guaranty, and UCC financing statement, and a host of other documents.

Just because someone signs (or co-signs) a note or signs a guaranty does not necessarily make them the owner of the real estate. Thus, the statement that your mother refinanced with your sister 8 years ago (circa 1994) tells me nothing about who owns the real estate.

The more you post, the more concerned I am that this is a real muddle and that Phil's previous post that you need professional advice to understand what has actually been done (for better or worse) and to attempt to accomplish whatever it is that you inted to accomplish in light of what has been done so far.

Regards, JAFO

Disclaimer

Yes, I am a lawyer, BUT THIS IS NOT LEGAL ADVICE; it is only general information. NO CLIENT RELATIONSHIP IS INTENDED TO BE CREATED, NOR IS ANY SUCH RELATIONSHIP SO CREATED. FOR SPECIFIC LEGAL ADVICE YOU SHOULD TALK TO A LAWYER IN YOUR AREA.







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