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Tax implications for buying out one parents share of a house.

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jg206

Junior Member
What is the name of your state? I live in New York

My parents are currently going through a separation. They own a house together with both of their names on the deed and the mortgages. They currently have $150,000 total remaining on their mortgage and equity loan. I would like to transfer the deed from my mother and my father to my father and myself, I would also like to refinance the house for $300,000 and give my mother $75,000 as payment for her part of the house. What are the tax implications for my mother and my self?
 


FlyingRon

Senior Member
What does dad get? I'll presume nothing.

What it sounds like you are doing is buying the house for $225,000. The tax implications are they will have a capital gain of the difference between that and their basis (roughly what they paid for it). However if they lived in it as principal residence for 24 out of the preceding 60 months, this can be excluded from taxation (they will have to report it).

You will FINANCE (not refinance) the purchase of the property in your name. There's no real tax implication to this (other than that as a qualified residence the interest is now deductible to you). The downside, is getting $300,000 on a $225,000 purchase. What is the intent of the other $75,000?
 

LdiJ

Senior Member
What is the name of your state? I live in New York

My parents are currently going through a separation. They own a house together with both of their names on the deed and the mortgages. They currently have $150,000 total remaining on their mortgage and equity loan. I would like to transfer the deed from my mother and my father to my father and myself, I would also like to refinance the house for $300,000 and give my mother $75,000 as payment for her part of the house. What are the tax implications for my mother and my self?
There are no real, immediate tax implications for any of you. You will be buying your mother's share of the property.

Your mother will have no tax implications because for her, its part of a marital settlement agreement. For her, it immaterial who is the buyer, it not a taxable event.

There will be no tax implications for your father either because he isn't selling his share.

As long as everything is done based on Fair Market Value its not a taxable event for you either.
 

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