tonewbeginnings
Junior Member
What is the name of your state? NY
Ten years ago, our parents had gifted to me and my sibling, the house we live in. We're in the process of selling the house now and we're trying to determine the tax implications of what we're doing.
The particular details are listed below:
Parents purchase house thirty years ago: $77,000
Value @ time of gift ten years ago: $300,000
Current value: $770,000
We understand our cost basis is going to be what our parents paid for the house: $77,000 and not what the value of the house was when it was gifted to us. Am I correct in this?
Now that we're selling the house, I also understand that both my sibling and I have a $250k exclusion we can take advantage of when filing. This would mean we have $500k total. Our taxable amount then, would then $270k. The $270k would be taxed at 15% long term capital gains. Am I correct in understanding this too?
Up to that, I think I've understand what should happen when filing, but where I do get confused is:
1. We're planning on purchasing two separate (smaller) houses with the proceeds. Does this affect the taxable amount we pay on capital gains?
2. If so, would this change things further if we kept both properties under one of our names?
3. When we close on the selling of our house, do the proceeds have to be divided equally between the two of us for tax purposes? If not, can we have the proceeds be made to one of us and we still take the $500k exclusion?
We've been so confused trying to figure this out ourselves. We've already made an appointment to see an accountant, but we'd love to try to become educated as best we can before we see the accountant.
Thank you all!
Ten years ago, our parents had gifted to me and my sibling, the house we live in. We're in the process of selling the house now and we're trying to determine the tax implications of what we're doing.
The particular details are listed below:
Parents purchase house thirty years ago: $77,000
Value @ time of gift ten years ago: $300,000
Current value: $770,000
We understand our cost basis is going to be what our parents paid for the house: $77,000 and not what the value of the house was when it was gifted to us. Am I correct in this?
Now that we're selling the house, I also understand that both my sibling and I have a $250k exclusion we can take advantage of when filing. This would mean we have $500k total. Our taxable amount then, would then $270k. The $270k would be taxed at 15% long term capital gains. Am I correct in understanding this too?
Up to that, I think I've understand what should happen when filing, but where I do get confused is:
1. We're planning on purchasing two separate (smaller) houses with the proceeds. Does this affect the taxable amount we pay on capital gains?
2. If so, would this change things further if we kept both properties under one of our names?
3. When we close on the selling of our house, do the proceeds have to be divided equally between the two of us for tax purposes? If not, can we have the proceeds be made to one of us and we still take the $500k exclusion?
We've been so confused trying to figure this out ourselves. We've already made an appointment to see an accountant, but we'd love to try to become educated as best we can before we see the accountant.
Thank you all!