Gift tax/capital gain — house to daughter
Terry, my daughter is going to assume our mortgage and pay us the equity we have in the house from her savings. It will be approximately $150,000. Will she have to pay a gift tax? And /or will we have to claim this as a capital gain of any type and have to pay taxes on this amount? Any info would be greatly appreciated. Thanks,
Terry Says
Whoa!! You definitely need a real estate attorney to handle this transactions. I see a LOT of red flags!
1. Your daughter likely cannot legally assume your mortgage. (I’m guessing it’s a low rate loan.)
2. She can’t legally become the owner of your home without paying off the existing mortgage. Then she will have to qualify for a mortgage.
3. There will have to be a sales price. That will determine if YOU and your husband owe any taxes. Assuming it has been your principal residence for the last few years, you can exclude $500,000 of gains –IF you file a joint return.
Who thought up this crazy idea??? It won’t work as you have structured it –and it is going to get you all in a lot of financial trouble!
