Brookenstein
Member
We are in California
I have no clue how capital gains works and was wondering if someone could help.
My friend bought a house 1 year ago for $195 in a sale/transfer from her parents. It appraised at the time for $250. They put about $20k into it, but a lot of that was labor to a family member under the table. They are now looking at buying a new house for about $450. Since they only owned the other property for a year (they did live in it for 4 years prior to buying it) will they owe a substantial amount it capital gains? They are planning to list the house at $350. Would it make more sense to keep the house and rent it for a year, then sell it?
Any advice appreciated. She is moving ahead very quickly... went house shopping Monday, put an offer in yesterday and put her house up for sale yesterday as well. I just want to make sure she is making the best financial decisions and won't be shocked by the tax outcome this time next year.
I have no clue how capital gains works and was wondering if someone could help.
My friend bought a house 1 year ago for $195 in a sale/transfer from her parents. It appraised at the time for $250. They put about $20k into it, but a lot of that was labor to a family member under the table. They are now looking at buying a new house for about $450. Since they only owned the other property for a year (they did live in it for 4 years prior to buying it) will they owe a substantial amount it capital gains? They are planning to list the house at $350. Would it make more sense to keep the house and rent it for a year, then sell it?
Any advice appreciated. She is moving ahead very quickly... went house shopping Monday, put an offer in yesterday and put her house up for sale yesterday as well. I just want to make sure she is making the best financial decisions and won't be shocked by the tax outcome this time next year.