Parents selling home & moving in with me, how can they avoid capital gains tax?
Posted by taxliensMy boyfriend and I just bought a house (110K lien), and his parents will be moving in with us, in a garage-converted apartment. Parents are selling thier house for k to my boyfriend’s older sister. Since they are close to 80 and have no other assests, we are trying to invest legally but avoid capital gains. Should that 80k be paid on our house and add the parents to the title, or should the deed to the original house be passed as a "gift" to the sister and sister pay mom & pop under the table? Or should the 80k be split between all 7 of mom & pop’s children as an inheritance (even though both are alive, they do not have a will). Let me know what options exist.
The parent’s home is a single-wide mobile home on a permanet foundation on 1 1/2 acres of land in Maryland. They bought the land & the mobile home in the early 1980s and have owned & occupied it since then.
They can exclude up to $500,000 in capital gains from the sale of their home if they meet the criteria - married and filed jointly the past few years, and it was their primary home. Have them put the money in the bank and make a will - PRONTO! Without a will, who will pay to bury them if they are destitute? If their name is on the house, you could be required to split their half with their heirs upon their death - lotsa complications - keep their name off the house.
If there are living with you and paying no rent, get some legal advice - don’t rely on the Internet. We all mean well, BUT we sure could steer you in the wrong direction.
Good luck - and God bless you for doing what’s right. Families don’t often take care of their "old ones" like they should - you two are gems!