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Sales Strategy of jointly owned property

My wife's sister is selling her condo. Her parents helped her buy the place and put the condo in her name and my wifes name with the understanding that when she eventually sold the place my wife would get half of the profit from sale of the home. The condo will probably sell for 400K w/ 100K left on the mortgage. Thus my wife and her sister should each get 150K each. What is the best strategy to reduce tax liability here?

My understanding is that my wife's portion will be taxed as regular income. Is there anyway to reduce it? One of my relatives says we should roll it into some other property. Another idea is for my wife's sister to hold on to the first

250K (my understanding is that the first 250K is tax free) and then pay my wife 11K and me 11K each year until my wifes' portion is paid out. One is allowed to receive 11K in gifts tax free, yes? Could we include our son in the 11K payments too? Is this overly complicated? thanks, bill

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Reply to
bclee05
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Sell for less

It's cap gain.

Your relative should stick to their day job and leave giving tax advice to the professionals.

Gifts are never income no matter how much.

Yes. Your wife is taxed on her share of the profit. Period. Who gifts what to whom doesn't change that.

-- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062

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Reply to
David Woods, EA, ChFC, CLU

From the facts you state, the condo is owned 50/50 by the sisters. Apparently your sister-in-law has lived in the condo for at least 2 years. If so, she can benefit from the exempted gain on HER HALF of the condo. So the max (if basis was zero) that could be exempted by the sister is 200,000. The actual gain basis for each half is likely different if the parents paid a part, then the sister-in-law paid the mortgage payments. I would advise you to get professional help on this. What you pay him/her will keep you out of trouble with the IRS. Mike Lewis, CPA

Reply to
Mike Lewis

Well, wife could go live in the place for the next two years so that the shares of both sisters would be exempt up to $250,000 each. But I'd guess that's impractical.

But in this case it wouldn't be a gift. It would only look like one. Stu

Reply to
Stuart A. Bronstein

Ya think?

You know that and I know that but....

-- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062

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Reply to
David Woods, EA, ChFC, CLU

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