Father willed me a house

[earlofcrankcase]

Houston TX
My father has willed me a house. He told me I could sell it at any time & keep the difference once he is paid his original investment & pays the capital gains taxs.
The house is currently rented. The tenant wants to buy it. The value is 75k.
If I write up an owner finance contract between my father and the girl that wants to buy it.

1. Can I receive what is left on the note instead of the house without changing the will?
2. If not. Would a hand written amendment such as note on in front of the property discription suffice?
2. would he have to pay any taxs if he does not get paid back more than his original investment before his time comes?

 

[weenor]

Houston TX
My father has willed me a house. He told me I could sell it at any time & keep the difference once he is paid his original investment & pays the capital gains taxs.
The house is currently rented. The tenant wants to buy it. The value is 75k.
If I write up an owner finance contract between my father and the girl that wants to buy it.

1. Can I receive what is left on the note instead of the house without changing the will?

Nope- once the house is sold it is no longer you fathers' property "to will" and the money is a different type of property that would have to be addressed in the will.

2. If not. Would a hand written amendment such as note on in front of the property discription suffice? For what? If your father is still alive and competent, he decides what happens with the proceeds from the sale of the home.
2. would he have to pay any taxs if he does not get paid back more than his original investment before his time comes? I have no idea what your asking here.

Bottom line is that the sale of the home has nothing to do with what he has willed if he is still alive, except that property described in the will is no longer in existence and cannot therefore be disbursed at the time of his death.

 

[earlofcrankcase]

question #3 was about capital gains that have not occured. If he has not been paid back more than he has in it. There is no profit ot tax. owner finance contract.

 

[BelizeBreeze]

question #3 was about capital gains that have not occured. If he has not been paid back more than he has in it. There is no profit ot tax. owner finance contract.

Answer # 1: You have no claim to the home. This is your father's home to sell and if he so wishes, he can give you a piece of the prize, but will still be liable for all taxes .

Suggesting that you can sell the home for him then pay him a small portion of the profits to alleviate his tax burden is what the feds like to call fraud.

 

[pojo2]

How long has he lived in the house? He has a federal exemption before any of the profit is taxed if he has lived there 2 of the last 5 years.

Since you will need an Atty to draw up a proper contract then ask him or her these questions as a prerequisite to helping you draw up the contracts. Please don't say you are going to do it yourself?

 

[earlofcrankcase]

Nope. $500.00 seems high to me. But then again everyone's got to make a buck. Paying someone for this is money well spent.
As for the fraud thing. Your half right Belize. My motive is to not pay tax. But that only becomes a crime when you do it illegally.
Here are the facts one more time.
Please try to Keep the literary Terets syndrome in check if you can.
My father has willed me the house I have rented from him from 1991 to 2004. He has also told me I could sell it now if I wish & return to him his origional investment. Selling it (the house) through a mortgage company now would mean I would loose the capital gains taxs my dad would owe the government because the house is worth twice what it was when it was purchased fifteen years ago. This is still currently a rental property.

The benefits I hope to realize in an owner finance deal are.
My dads monthly payment would increase.
He would not have to pay or keep track of the property taxs.
He would not have to pay any capital gains taxs as it would take ten years before he was paid more than the origional purchase price.
I would not have to maintain the property.
I would still receive title to the owner finance contract when the time came with minor modifications to his existing will.

 

[anteater]

My father has willed me the house .

Irrelevant

I have rented from him from 1991 to 2004. He has also told me I could sell it now.....

You don't own it. You can't sell it.

The benefits I hope to realize in an owner finance deal are.
My dads monthly payment would increase.
He would not have to pay or keep track of the property taxs.
He would not have to pay any capital gains taxs as it would take ten years before he was paid more than the origional purchase price.
I would not have to maintain the property.
I would still receive title to the owner finance contract when the time came with minor modifications to his existing will

http://www.irs.gov/pub/irs-pdf/p537.pdf

 

[tranquility]

I think I'll take a t-t-t-orette-style stab at this you $%*&^.

Here is my understanding. The house is your father's. (You have no heirs until you're dead. Being given something in a will does not even set up an expectancy of property rights.) He uses it as a rental property. By owner finance deal, I am assuming an installment sale.

Asking the question on this list is a little funny as I'd love to see the self-prepared tax returns that report whatever the final result would be. But, in general, your father will pay capital gains tax on the principal payment and receive ordinary income for the interest over time. He will have to pay tax on the recapture of depreciation as well. The capital gains portion would be reduced by the house's basis.

1. My dads monthly payment would increase.
Agreed.

2. He would not have to pay or keep track of the property taxs.
As long as he doesn't need to take the property back, agreed.

3. He would not have to pay any capital gains taxs as it would take ten years before he was paid more than the origional purchase price.
Look to the IRS installment sale form and instructions to see how it will go. There will be other income from the interest on the note and the recapture of the depreciation too.

4. I would not have to maintain the property.
See #2.

5. I would still receive title to the owner finance contract when the time came with minor modifications to his existing will
It's a pity *you* will continue to pay taxes on the contract after your father's death. There is no step-up on basis in installment contracts as there would be in the house.

 

[earlofcrankcase]

All righty then.
I will continue to rent the house for him.