Avoiding Capital Gains

[dealbert]

I've lived for the past 4 years in arizona in a house my father owned.

Last year he transferred my name to title, and I took out a new mortgage for 150k. My father owed 100k at the time of refinance with a house appraisal of 185K. The home's current mkt value is ~250K, however my father's intent was to transfer me at his cost basis of 150K, use gifting law to transfer me equity in house without him paying tax, and finally allow me to sell the house after 2 years of living and be protected up to 250K of profit from capital gains.

It's been about 14 months since my name is on title, and I am interested to sell and purchase a new home. If I can indeed save ~15k in capital gains taxes by waiting another 10months, I probably will. However, I am looking for some professional advice since I have learned over the years never to fully trust my old man.

I appreciate any feedback. If my situation was not stated clearly, please ask questions and I will clarify.

thanks

 

[HomeGuru]

I've lived for the past 4 years in arizona in a house my father owned.

Last year he transferred my name to title, and I took out a new mortgage for 150k. My father owed 100k at the time of refinance with a house appraisal of 185K. The home's current mkt value is ~250K, however my father's intent was to transfer me at his cost basis of 150K, use gifting law to transfer me equity in house without him paying tax, and finally allow me to sell the house after 2 years of living and be protected up to 250K of profit from capital gains.

It's been about 14 months since my name is on title, and I am interested to sell and purchase a new home. If I can indeed save ~15k in capital gains taxes by waiting another 10months, I probably will. However, I am looking for some professional advice since I have learned over the years never to fully trust my old man.

I appreciate any feedback. If my situation was not stated clearly, please ask questions and I will clarify.

thanks

**A: this is not the Tax Law forum. Post there.

 

[FlyingRon]

The mortgages have no BEARING at all in the capital gains.

You are correct, regardless of your father's intent, you got whatever his original basis was when you got the gift.

You must have owned the house and used it as your principal residence for 24 of the last 60 months to get the $250,000 exclusion.

Don't forget that the state may also tax your gain (you didn't say where this property is).