What is the name of your state?What is the name of your state? California
I plan to purchase a house from my dad (not his primary residence). The fair market value of the house is $700k, and his cost was $400k.
Is it better to:
1. For my dad to sell the house to me for $400k at cost (so he has no capital gain), and for him to claim $300k gift in his 2006 gift tax return
or
2. For my dad to sell the house to me at FMV of $700k, and for him to recognize the capital gain ratably over 30 years if we do the transaction as an installment sale. So, he'll recognize $10k capital gain over 30 years. He has held the property for over 15 years, so is the capital gain rate 15% over the next 30 years?
Please advise. Thank you.
I plan to purchase a house from my dad (not his primary residence). The fair market value of the house is $700k, and his cost was $400k.
Is it better to:
1. For my dad to sell the house to me for $400k at cost (so he has no capital gain), and for him to claim $300k gift in his 2006 gift tax return
or
2. For my dad to sell the house to me at FMV of $700k, and for him to recognize the capital gain ratably over 30 years if we do the transaction as an installment sale. So, he'll recognize $10k capital gain over 30 years. He has held the property for over 15 years, so is the capital gain rate 15% over the next 30 years?
Please advise. Thank you.