On Oct 8, 11:01*am, Luke <luke_ai...[at]hotmail.com> wrote:

- quote -

The taxes on the gain shouldn't be but $15k - $20k for owner 4. He'll
still walk away with almost $100k. Is it really worth it to move AND
tie-up the property/money for 2 years? Owner 4 should be aware that if
housing prices decline not just he, but everyone, may end up with less
net gain.

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On Oct 8, 12:44*am, "Phil Marti" <prm20...[at]verizon.net> wrote:
- quote -

Phil,

Yeah, I thought it might be pushing the envelope. Looks like co-owner
4 is going to be spending a couple of years as an owner-occupant.

Thanks for the help.

Luke

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"Luke" wrote:

- quote -

You're confusing income tax fraud with perfectly legitimate gifts. What you
describe is fraud. I give you an interest in property. That's a gift. I
hide my interest in property in your name to avoid paying tax on my taxable
gain. That's fraud.
--
Phil Marti
Clarksburg, MD

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On Oct 7, 5:49*pm, JoeTaxpayer <joetaxpa...[at]comcast.net> wrote:
- quote -

Joe,

Thanks for the quick reply.

Co-owner 4 lived out of the area, shared equally in appreciation, tax
deductions, maintenance, expenses, etc. No rent income.

Assuming the 3 remaining co-owners concurred and understood the gift
tax implications (which would be essentially irrelevant for them),
would it seem like a reasonable strategy to have co-owner 4 quitclaim
to co-owners 2 and 3 to minimize the total capital gain via the
$250,000 exemption and then have co-owners 2 and 3 gift equitable
amounts to co-owner 4 such that all 3 netted equal amounts?

Luke

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Luke wrote:
- quote -

the $50K step up in basis to FMV for the decedent) or $150K each.
The proceeds of $800K less $450K is a realized gain of $350K or
$117K (rounded) each. It appears that owners 2 and 3 meet the
qualifications for excluding gain on the sale of a main home and
would not have any recognized gain. Owner 4 is not eligible for
the exclusion. Assuming that owner 4 bought the original 1/4
interest as an investment, then there is a recognized long-term
capital gain of $117K.

You have not identified the "costs" incurred. It is possible
that some part of those costs could have been capitalized by
owner 4 and owner's 4 gain would be less.

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Luke wrote:
- quote -

Unless I am missing something, 4 co-owners had basis of $100,000 each.
When number 1 died and left his share, that share was worth $150,000 and
added $50,000 to each of the 3 survivors, who now have 1/3 shares with
basis of $150,000. 800/3 = $266,667 so the gain is only $116,667, far
less than the $250,000 exclusion for....
Ok, here's what's missing, I was on a path to answer as if all lived
there. What was co-owner 4's deal? Did he get rent out of this or just a
share of appreciation? His gain cannot be excluded, as he did not reside
there, and he may have been obligated to take depreciation over the 10
years.

Joe
www.blog.joetaxpayer.com

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Can someone please explain what each surviving co-owner's capital
gains tax calculation would be under the following scenario?:

Single family home purchased for $400,000 and sold 10 years later in
2008 for $800,000.
4 original co-owners, title held as joint tenants with right of
survivorship.
All costs and itemized mortgage tax deductions were shared and split
equally between all 4 co-owners.
Co-owners 1, 2 and 3 were owner-occupants for the entire time they
were alive during the period
the house was owned. Co-owner 4 never legally resided in the house.

Co-owner 1 died in 2005 when the fair market value of the house was
$600,000.

If I have omitted any pertinent details please let me know and I will
gladly provide them.

TIA

Luke

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