18 Apr Taxes on home that was sold for $1
Q. My parents transferred their home to me and my sister in 2006 by deed for $1. My sister has always lived there and has a 50 percent ownership. My widowed father also lives there and they share expenses. I pay nothing towards the monthly upkeep but pay for needed minor repairs. What happens tax wise upon selling the property?
A. You won’t get the same tax benefits as your sister because you didn’t live in the home.
First, your parents selling the home to you and your sister for $1 was really a gift, not a sale, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.
“You and your sister obtained the home at your parents’ basis, plus $1, plus the cost of any improvements made since you have owned the home, Romania said. “Upon sale of the property, gain is recognized equal to the sales price, less selling expenses, less basis.”
Because your sister lived in the home, she is entitled to exclude her share of the gain, up to $250,000, Romania said.
“You are not entitled to the same exclusion because you did not live in the home,” she said.
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This story was originally published on April 18, 2019.
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